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ATLAS   SERIES,   No.  8 


THE  GOLD  ROOM 


And  the  New  York  STOCK  EXCHANGE 
and  CLEARING   HOUSE. 


BY 


KINAHAN    CORNWALLIS. 


NEW    YORK  : 
A.     S.     BARNES     &     CO. 

in    &    ii      WILLIAM    STREET. 


ATLAS  SERIES,   No.  8. 


THE  GOLD  ROOM 


And  the  New  York  STOCK  EXCHANGE- 
and  CLEARING  HOUSE. 


BY 

KINAHAN    CORNWALLIS. 


NEW    YORK  : 
A.    S.     BARNES     &    CO., 

in    &    113   WILLIAM    STREET. 


ANNOUNCEMENT. 


ATLAS    SERIES. 

The  Publishers,  A.  S.  BARNES  $>  Co.,  have  begun  the  pub- 
lication of  a  series  of  volumes,  with  the  title  ATLAS,  in  which 
they  propose,  to  bring  out,  at  a  moderate  price,  and  at  various 
times,  important  Essays,  Stories,  etc.,  bearing  upon  contem- 
porary events,  of  current  interest  and  of  permanent  value. 
The  contents  will  be  original,  and  prepared  by  eminent  writers 
on  both  sides  of  the  ^Atlantic. 

No.  8—  THE    NEW    YORK    GOLD    ROOM, 

STOCK    EXCHANGE,    AND    CLEARING    HOUSE.      By  KINAHAN 

CORNWALLIS,  .  .  .  f  .  .  .      '  .         $0   20 

No.  7—  BURIED     MILLIONS. 

By  J.  V.   C.   SMITH.      Paper,  .....  10 

No.   6-A   SHOCKING    STORY. 

By  WILKIE    COLLINS.      Paper,  ......  08 

No.   5—  INTERNATIONAL    EXHIBITIONS. 

PARTS,    PHILADELPHIA,   VIENNA.      By  CHARLES  G-INDRIEZ  and 

J.    MORGAN    HART.       Cloth,         .  .  .  .  .  /      75 

No.  4—  THE    CENTENNIAL    EXHIBITION. 

By  FRANCIS    A.  WALKER.       Cloth,  ,  .  75 

No.  3—  THE    LABOR    QUESTION. 

By  THOMAS    BRASSEY.    M.P.     THOMAS    HUGHES,    M.P.,    EDWARD   A. 

FREEMAN,  D.C.L.,   and  others        Cloth,        .  .  .  1  00 

No.   2—  MODERN    POETS,    HISTORIANS,    AND    STATESMEN. 

By  EDWARD  A.  FREEMAN,  D.C.L.,   and  others      Cloth,  .         1  50 

No.    .—CURRENCY    TROUBLES. 

By  AMASA  WALEBR,  LL  D.      Cloth,          .  .  50 

For  gale  by  Newsdealers  and  Booksellers,  or  sent  by  mail,  postpaid,  on  receipt  of  price, 

by  the  ftiblishers. 

V 
Copyright,  1879,  by  A.  S.  Barnes  &  Co, 


THE  NEW  YORK  GOLD  ROOM. 

FOR  nearly  a  fortnight  after  the  New  York  banks  suspended 
specie  payments,  on  the  3ist  of  December,  1861,  there  was  no 
regular  gold  market.  The  transactions  in  the  precious  metals  had 
been  confined  to  the  counters  of  the  dealers  in  bullion  and  uncurrent 
money,  who  asked  for  it  a  small  but  gradually  advancing  premium. 
The  first  formal  dealings  in  gold  took  place  in  Wall  street — or  rather 
in  William  street — on  Monday  the  I3th  of  January,  1862,  and  all  the 
transactions  on  that  day  were  at  103.  The  existence  of  the  New 
York  Gold  Room  practically  began  at  that  date — although  the  Gold 
Exchange  was  not  organized  until  a  year  and  three  quarters  afterwards. 
Thenceforward  gold  was  regularly  dealt,  both  at  the  Stock  Exchange 
and  on  the  Street.  The  stock-brokers,  however,  deemed  it  unpatri- 
otic to  buy  gold,  and — believing  the  premium  could  not  long  be  main- 
tained— they  had  a  penchant  for  selling  it  "  short/'  or,  in  other  words, 
for  future  delivery,  without  having  it  in  possession,  hoping  for  a 
decline  that  would  allow  them  to  buy  at  a  profit,  and  so  cover  their 
contracts.  But  finding  that  it  continued  to  rise,  they  desisted  from  this, 
and  ultimately  passed  a  resolution  refusing  to  deal  in  it  at  all  at  the 
Board.  To  this  they  steadily  adhered  ever  afterwards,  excepting  that 
when  the  Black  Friday  panic  occurred,  involving  the  closing  of  the 
Gold  Room,  they  for  the  time  being  provided  for  gold  dealings,  and 
an  attempt  was  made  to  establish  a  gold  department  of  the  Stock 
Exchange,  but  the  proposition  was  rejected. 

The  early  infancy  of  the  Gold  Room  was  passed  in  the  "  Coal 
Hole"  in  William  street,  between  Beaver  and  Exchange  Place,  and 
just  below  the  passage-way  then  leading  to  the  Stock  Exchange — a 
dark,  repulsive  basement,  since  improved,  and  converted  into  a  restau- 
rant. The  apartment  was  shared  by  its  first  inmates,  a  host  of  stock 
operators  and  "  curb-stone  "  brokers— a  class  which  has  since  become 
extinct— who  afterwards  organized  as  the  Open  Board  of  Brokers. 
Although  speculation  in  gold  soon  became  active,  the  premium  ruled 
low  for  six  months  after  the  suspension.  During  the  first  four  months 
of  1862,  the  extreme  variations  in  the  premium  were  from  I  to  3$- 


4  THE   NEW   YORK   GOLD   ROOM. 

per  cent.  only.  In  May  it  rose  from  2  to  4  per  cent.,  and  in  June 
steadily  advanced  to  9^,  but  military  reverses  sent  it  up  to  20  in  July, 
although  it  fell  to  \2\  in  August,  from  which  point  it  gradually 
moved  upward  to  34  before  the  close  of  the  year.  In  March  1863,  it 
rose  to  7if,  but  declined  to  22-J-  in  August,  and  advanced  again  to  54, 
from  which  point  it  continued  to  ascend  till  the  nth  of  July,  1864, 
when  the  highest  figure  it  ever  attained  was  reached.  The  large 
war  expenditures,  the  spread,  and  uncertain  duration  of  the  conflict, 
and  the  steady  augmentation  of  the  volume  of  the  currency,  naturally 
stimulated  speculation  for  a  rise  in  gold,  and  the  people  at  large  par- 
ticipated in  it  to  an  extent  that  recalled  historical  memories  of  the 
Tulip  Mania  in  Holland,  and  of  the  South  Sea  Bubble  in  England. 
Importers  bought  gold,  not  only  to  pay  their  foreign  indebtedness,  but 
to  secure  themselves  against  any  depreciation  of  the  currency  that 
might  occur  between  the  time  of  the  purchase  of  their  goods  abroad 
and  that  of  their  being  marketed  at  home,  as  well  as  to  provide  for 
the  payment  of  customs'  duties.  Merchants,  manufacturers,  and  others 
engaged  in  legitimate  business  bought  it  to  protect  themselves  against 
loss  on  their  stocks  of  merchandise,  and  the  private  bankers  with 
European  connections — commonly  called  foreign  bankers — bought 
it  for  shipment  against  their  bills  of  exchange  whenever  the  notes 
for  sterling  were  high  enough  to  make  such  shipments  profitable. 
But  the  purchases  for  commercial  purposes  were  a  mere  drop  in 
comparison  with  the  ocean  of  speculative  transactions.  The  mer- 
cantile community,  and  the  foreign  bankers,  not  content  with  satisfy- 
ing their  trade  wants  became,  -in  most  instances,  heavy  speculators, 
while  nearly  all  the  professional  stock-jobbers  in  Wall  street  operated 
in  gold  as  fully  as  in  securities.  Men  of  all  pursuits,  all  over  the 
country,  who  had  funds  sufficient  to  furnish  the  necessary  ten  per 
cent,  margins — five  per  cent,  is  now  more  than  sufficient — became 
gold  speculators,  and  the  telegraph  wires  were  all  day  long  bearing 
their  orders  to  brokers  to  buy,  or  sell.  Lawyers  and  editors,  clergy- 
men and  doctors,  learned  professors  and  illiterate  store-keepers, 
bank  officers  and  farmers,  dentists  and  architects,  publishers  and 
authors,  army  paymasters  and  government  clerks,  gamblers  and 
gentlemen,  saints  and  sinners — a  mighty  and  a  motley  host,  composed 
of  good,  bad,  and  indifferent  elements — rushed  to  the  Gold  Room, 
either  in  propria  persona  or  through  the  medium  of  a  sweltering  multi- 
tude of  brokers,  whose  cries  and  gesticulations  in  times  of  excitement 
— and  they  were  many — bordered  upon  the  frantic.  Some  of  the 
latter  made  large  fortunes  with  great  rapidity,  their  commission  of 


THE  NEW  YORK  GOLD   ROOM.  5 

twelve  dollars    and  a  half  on    every  ten  thousand  dollars   in   gold, 
bought  or  sold,  often  amounting  to  thousands  of  dollars  a  day. 

The  heaviest  speculative  orders  were  sent  from  Washington  and 
Baltimore,  and  next  to  these,  from  Louisville,  Kentucky,  owing  to 
these  cities  being  in  close  communication  with  the  seat  of  war  and 
the  rebel  lines  ;  and  the  operators  there,  almost  to  a  man,  were  "  bulls  " 
in  feeling,  and  strong  Secessionists.  But  though  seldom  or  never 
found  selling  "  short  "  they  were  quick  to  sell  out  their  "  long  "  gold 
— that  is  the  gold  they  were  carrying — whenever  the  Confederate 
arms  met  with  a  reverse,  and  as  quick  to  buy  it  back  again  when  the 
market  seemed  to  "  touch  bottom."  As  news-getters  these  men  were 
like  hawks  in  search  of  prey,  and  those  at  Washington  in  particular 
seemed  to  scent  victory,  or  defeat,  with  unerring  sagacity,  and  when 
they  were  buying  or  selling,  it  became  a  habit  with  brokers  and 
operators  in  the  secret  to  follow  suit.  The  so-called  Washington 
party  was  composed  not  only  of  the  private  bankers,  and  nearly  all 
the  bank  officers,  in  the  city,  but  of  many  influential  members  of  both 
houses  of  Congress,  lobbyists,  clerks,  and  others,  in  the  Government 
offices,  with  facilities  for  obtaining  early  war  news,  and  a  large  floating 
population  of  army  contractors,  and  speculators  who  had  taken  up 
their  residence  there  for  the  purpose  of  getting  early  intelligence  of 
important  events,  whence  they  telegraphed  their  orders  to  their  brokers 
in  Wall  street.  Every  man  in  the  War  Department,  and  the  Execu- 
tive Mansion,  who  was  so  situated  as  to  be  able  to  communicate 
valuable  information  in  advance  of  the  newspaper  dispatches,  was 
approached  by  the  gold  operators,  and  in  most  instances  an  arrange- 
ment existed  between  the  former  and  the  latter,  for  mutual  profit. 
The  Washington  newspaper  correspondents  were  particularly  active 
in  gleaning  and  telegraphing  news  to  Wall  street  houses,  for  use  in 
the  Gold  Room ;  some  of  these  men  were  paid  by  a  salary  from  each 
firm  that,  in  their  own  vernacular,  they  "  kept  posted,"  while  others, 
and  the  majority,  were  compensated  by  the  profits  on  purchases,  or 
sales,  of  gold  made  on  their  account  by  the  parties  whom  they  thus 
informed.  Almost  every  individual  speculator  in  the  Gold  Room, 
whose  transactions  were  large  enough  to  make  it  of  consequence, 
had  a  correspondent  at  the  national  capital,  who  sent  him  a  telegraphic 
dispatch  as  occasion  required.  Sometimes  information  so  communi- 
cated was  of  great  advantage  to  speculators,  but  more  frequently  it 
had  been  "  discounted  "  in  the  Gold  Room  before  there  was  time  to 
act  upon  it,  owing  to  the  same  advices  being  simultaneously  received 
by  many  others,  or  in  consequence  of  news  from  one  quarter  being 


6  THE   NEW   YORK   GOLD   ROOM. 

neutralized  by  news  from  another,  as  well  as  owing  to  local  speculative 
influences,  such  as  determined  efforts  to  "  bull "  or  "  bear  "  the  market 
by  large  individual  operators,  or  cliques,  in  which  case  the  struggle 
between  the  contending  elements  would  wax  fierce  and  loud,  and  the 
Gold  Room  would  present  a  howling  mass  of  agitated  forms  and  flash- 
ing eyes,  suggestive  of  some  of  the  scenes  in  Dante's  "  Inferno." 

Immediately  after  the  receipt  of  news  of  an  unexpected  victory, 
or  defeat,  the  Babel  of  voices  in  the  "  Coal  Hole  "  arrested  the  atten- 
tion of  passers-by  in  William  street,  and  through  the  tremendous 
uproar  and  the  confusion  of  sounds  could  be  heard  some  voice  louder 
than  the  rest,  exclaiming,  perhaps — "  I'll  give  a  half  for  a  hundred — 
half  for  a  hundred — five-eighths  for  a  hundred."  "  Sold  "  would  be 
the  responsive  cry  of  some  one  near,  by  which  the  initiated  looker-on 
would  know  that  a  hundred  thousand  dollars  in  gold  had  been  bought 
at.  a  certain  price  of  which  the  fraction  was  f,  although  no  mention  of 
thousand  had  been  made  in  the  transaction,  the  latter  being  the  unit, 
and  it  being  always  tacitly  understood  that  the  number  offered,  or 
bid  for,  implied  so  many  thousands,  and  that  the  fraction  named  was 
over  and  above  the  even  figure  last  previously  quoted.  The  sale  in 
question,  it  may  be  assumed,  was  at  iiof. 

"  Ten  at  three-quarters,"  some  seller  would  shout,  with  an  energy 
that  under  other  circumstances  might  have  seemed  to  savor  of 
desperation. 

"Take 'em,"  would  be  the  rejoinder  of  the  buyer,  and  ten  thousand 
at  1 10}  accordingly  changed  hands. 

Gold  bought  or  sold  thus  was  in  the  "  regular  way,"  namely,  to  be 
delivered  on  the  next  day,  all  transactions  being  so  considered  where 
no  time  was  mentioned,  such  as  "  Buyer  three,"  or  "  Seller  three  " — 
meaning  so  many  days'  option  to  deliver  to  the  buyer  or  seller — or 
"  cash,"  signifying  deliverable  on  the  same  day.  In  dealings  on  the 
Stock  Exchange,  short  options  were  and  still  are  frequent,  but  in  gold 
they  have  always  been  comparatively  rare,  the  custom  of  borrowing 
from  day  to  day  to  make  deliveries  when  gold  has  been  sold  "  short  " 
being  universal,  and  by  the  lending  and  borrowing  system,  contracts 
can  be  kept  out  for  any  length  of  time,  as  in  the  case  of  stocks. 

Men  and  boys  were,  meanwhile,  to  be  seen  running  in  and  out  of 
the  dingy  basement,  as  if  their  lives  depended  upon  the  rapidity  of 
their  movements,  and  very  soon  there  would  be  a  grand  chorus  of 
bidders.  "  Twelve  for  fifty  "  from  a  dozen  mouths,  would  be  drowned 
by— "An  eighth  for  fifty  "—"a  quarter  for  fifty  "— "  a  half  for  fifty" 
— "  three  quarters  for  ten  " — "thirteen  for  a  hundred,"  the  premium 


THE  NEW  YORK   GOLD   ROOM.  7 

mounting  up  as  fast  as  the  bids  could  be  uttered.  This  was  a  sure 
indication  of  bad  news  for  the  Union  from  the  seat  of  war,  just  as  a 
pressure  to  sell  at  declining  figures  would  have  been  significant  of 
good  news.  But  gigantic  leaps  in  the  gold  market  in  a  single  day 
were  unknown  during  the  first  two  years  of  the  suspension — although 
there  were  wide  fluctuations  in  the  spring  of  1863  —  the  popular 
expectation  having  been  that  the  war  would  be  a  short  one,  and  none 
were  probably  more  sanguine  as  to  its  speedy  termination  than  Mr. 
William  H.  Seward,  whose  sixty  days  predictions  will  long  be 
remembered. 

Sectional  feeling  often  entered  largely  into  the  bull  and  bear  con- 
tests in  the  Gold  Room,  and  Union  men  and  rebel  sympathizers  fought 
their  battles  sometimes,  as  much  to  gratify  this  as  to  make  money. 
In  days  when  the  air  was  full  of  exciting  war  news,  they  would  shriek, 
and  wave  their  hats  and  their  hands,  and  shake  their  fists,  and  cast 
savage  glances  at  each  other;  and  sing  "  John  Brown  "  and  "  Dixie," 
and  sway  to  and  fro  like  demons  preparing  for  combat.  On  such 
occasions,  the  scene  seemed  to  be  one  of  fury  and  turmoil,  and  it  is 
not  surprising  that  men  sometimes  came  to  blows  in  the  heat  of  passion. 

The  active  speculation  in  gold,  coupled  with  its  rapidly  advancing 
premium,  was  denounced  by  the  pulpit  and  the  press,  as  the  scandal 
of  the  time,  and  on  the  i8th  of  February  1863,  the  Legislature  of  the 
State  of  New  York  passed  a  law  prohibiting  any  one  from  loaning 
more  than  par  in  currency  on  coin,  or  bullion ;  but  this  exerted  no 
perceptible  effect  upon  the  course  of  the  market  for  the  precious 
metal.  On  the  3d  of  March  1863,  Congress  passed  a  bill  to  the 
same  effect,  now  also  imposing  a  strong  tax  of  one  half  per  cent.,  and 
six  per  cent,  interest,  on  all  contracts  having  more  than  three  days 
to  run,  for  the  purchase  or  sale  of  gold  or  silver,  or  .for  loans  on  such. 
Gold  fell  from  171  to  139  before  the  close  of  the  month,  but  rallied 
to  157  on  the  1st  of  April.  Wall  street  was  then  the  scene  of  ram- 
pant speculation  in  stocks  under  the  leadership  of  Anthony  W. 
Morse,  and  borne  up  by  the  rising  volume  of  the  currency,  every 
thing  the  bulls  touched  advanced  rapidly.  There  was  more  money 
to  be  made  by  buying  securities,  than  gold,  and  consequently  spec- 
ulation was  diverted  to  a  certain  extent  from  the  latter  to  the  former. 
Moreover,  the  capture  of  Fort  Wagner  revived  hopes  of  a  speedy 
termination  of  the  war,  and  hence  the  current  of  speculation  was  so 
far  in  favor  of  a  fall  in  gold,  that  it  touched  the  before  quoted  figure 
of  122^  in  August.  After  this  the  inflation  of  prices  not  only  kept 
pace  with,  but  outran  the  inflation  of  the  currency,  and  gold  rapidly 

VOL   II.— 12 


8  THE     NEW     YORK      GOLD      ROOM.. 

reacted  upward.  Americans  became  a  nation  of  speculators.  Cotton, 
breadstuffs,  and  provisions,  were  speculated  in  as  freely  as  if  they 
had  been  stocks,  and  the  fact  of  their  value,  as  measured  by  the  cur- 
rency, having  been  a  constantly  fluctuating  one,  fomented  speculation, 
which  so  added  to  the  uncertainties  of  legitimate  business,  as  to 
invest  trade  itself  with  the  risks  of  speculation.  The  Produce 
Exchange  became,  like  the  Stock  Exchange,  the  theatre  of  active  and 
extensive  bull  manipulations,  and  a  prey  to  cliques.  We  heard  at 
different  times  of  parties  controlling  all  the  wheat,  pork,  butter,  lard, 
rice,  whiskey,  and  other  commodities  in  the  market,  and  occasion- 
ally of  a  "  corner  "  in  one  or  the  other  of  these,  just  as  we  had  become 
accustomed  to  hear  of  the  sharp  corners  in  Wall  street.  The  cotton 
market  was,  at  the  same  time,  as  much  used  as  a  gambling  arena  as 
the  Gold  Room. 

This  riotous  speculation  naturally  fostered  reckless  extravagance, 
on  the  principle  of  "  easy  come,  easy  go,"  and  a  lavish  and  ostenta- 
tious style  of  living  was  in  vogue  among  those  enriched  by  the  war, 
this  being  especially  the  case  with  those  who  had  acquired  wealth  by 
army  contracts,  and  oil  wells  in  Pennsylvania.  The  "  shoddy  aristoc- 
racy "  vied  with  the  "  petroleum  aristocracy  "  in  its  display  of  dia- 
monds, equipages,  stately  mansions,  and  "  purple  and  fine  linen," 
but  the  essence  of  vulgarity  was  discernible  in  both. 

The  nouveau  riche,  however,  and  speculators  and  speculation  gen- 
erally, suffered  a  heavy  blow  in  April  1864,  when  Mr.  Chase  visited 
New  York,  and  sold  several  millions  of  gold,  and  then  retained  their 
proceeds  in  the  sub-treasury.  The  money  market  had  been  previously 
active  at  seven  per  cent.,  owing  to  the  great  demand  for  loans  to  carry 
forward  the  immense  bull  speculations  in  stocks,  and  this  action  of 
the  Secretary  of  the  Treasury — which  was  evidently  designed  for  the 
purpose  it  accomplished — resulted  in  such  extreme  monetary  strin- 
gency, that  holders  of  blocks  of  speculative  stocks  were  unable  to  carry 
them,  and  being  forced  to  sell,  a  sweeping  panic  immediately  followed, 
in  which  stocks  declined  from  twenty  to  fifty  per  cent.,  and  Morse  and 
a  number  of  his  followers  failed  disastrously.  This  revulsion,  although 
attended  by  a  temporary  decline  of  a  few  per  cent,  in  gold,  was 
quickly  followed  by  an  advance  to  higher  figures  than  were  previously 
current,  the  fluctuations  of  the  month  having  been  from  i66J-  at  the 
opening  to  184  near  the  close.  Mr.  Chase,  further  bent  on  breaking 
down  the  gold  speculation,  which  he  rightly  regarded  as  a  national 
evil,  gave  notice  through  the  sub-treasury  that  greenbacks,  at  a  fixed 
rate,  to  be  announced  from  day  to  day,  would  be  received  in  lieu  of 


THE  NEW  YORK  GOLD  ROOM.  9 

gold  for  customs'  duties.  This  created  a  flurry  among  the  gold  specu- 
lators, and  large  speculative  sales  for  a  decline  were  made,  but  after 
a  few  days'  experience  it  was  found  that  the  price  fixed  by  the  Treasury 
failed  to  govern  the  Gold  Room,  the  quotations  there  having  advanced 
considerably  beyond  the  government  rate.  Mr.  Chase,  too,  saw  that 
the  public  credit  would  suffer  by  a  course  that  kept  coin  from  flowing 
into  the  Treasury.  The  plan  was  therefore  abandoned,  and  this 
being  construed  into  a  government  defeat,  the  bulls  availed  them- 
selves of  the  opportunity  to  rapidly  run  up  the  premium,  much  to  the 
loss  of  the  mercantile  community,  which  was  largely  "  short  "  of  gold 
in  anticipation  of  a  heavy  decline  consequent  on  the  cessation  of  the 
demand  for  duties. 

Mr.  Chase  now  advocated  the  abolition  of  the  Gold  Room,  and  the 
subject  attracted  much  attention  in  Congress,  the  result  being  that  on 
the  1 7th  of  June  the  celebrated  Gold  bill  was  passed — a  law  which  took 
effect  on  the  2ist  of  the  same  month.  Thereupon  the  Gold  Room  was 
closed,  and  the  importers  who  had  favored  the  bill,  chuckled  at  the 
prospect  of  cheap  gold,  while  the  unthinking  portion  of  the  public  at 
large — the  great  majority — looked  on  expectant  of  a  like  result.  But 
the  effect  of  large  issues  of  irredeemable  paper  was  not  thus  easily  to 
be  legislated  away,  nor  speculation  in  the  gold  value  of  those  promises 
to  be  extinguished,  by  a  mere  enactment  closing  the  regular  market  for 
the  precious  metal.  The  act  in  question  made  it  unlawful  to  contract 
for  the  purchase  or  sale  of  coin  or  bullion,  to  be  delivered  on  any  other 
day  than  that  on  which  the  contract  was  entered  into,  or  on  any  other 
terms  than  those  of  an  actual  delivery  and  payment  in  full  for  such  in 
lawful  money,  or  to  sell  any  of  the  same  unless  already  in  the  posses- 
sion of  the  seller,  or  to  borrow  or  loan  currency  on  either ;  or  to  sell  or 
buy  gold  other  than  at  the  ordinary  place  of  business  of  the  seller  or 
purchaser.  Foreign  exchange  was  subjected  to  exactly  the  same 
regulations,  excepting  that  ten  days'  contracts  were  permitted  in  it. 
All  contracts  made  in  violation  of  the  act  were  declared  void,  and  vio- 
lators were  to  be  held  guilty  of  a  misdemeanor,  and  punished  with  a 
fine  of  from  one  to  ten  thousand  dollars  for  each  offence,  or  im- 
prisonment from  three  months  to  a  year,  or  both. 

The  abolition  of  the  Gold  Room, involved  in  this  unwise,  not  to  say 
absurd  law,  was  its  worst  feature,  for  it  closed  the  door  to  competition 
among  bona  fide  holders  of  coin,  as  well  as  among  speculative  sellers. 
The  real  holders  of  gold  were  thus  isolated,  and  each  individual  of 
their  number  was  free  to  ask  whatever  price  he  pleased  for  the  metal. 
Every  one  naturally  wanted  the  highest  price  obtainable,  and  there 


10  THE  NEW  YORK  GOLD   ROOM. 

began  a  rise  faster  than  ever  in  the  Gold  Room.  Those  who  had  to 
pay  customs'  entries  and  foreign  indebtedness  became  alarmed,  and 
rushed  to  the  offices  of  the  bullion  dealers  in  Wall  street,  to  make 
their  gold  purchases  at  the  going  price,  whatever  that  might  be, 
fearing  that  it  would  soon  be  still  higher.  Those  who  had  sold 
"short"  were  still  more  apprehensive  of  the  future  course  of  the 
premium,  and  in  trying  to  "cover"  their  contracts  accelerated  the 
upward  movement.  No  quotations  for  gold  were  made  on  the  Stock 
Exchange,  or  on  the  street,  and  purchasers  had  to  run  from  office  to 
office,  inquiring  the  price  at  which  holders  were  willing  to  sell. 
Leading  merchants  and  bankers,  who  had  urged  upon  Congress  this 
prohibitory  legislation,  now  wrote  and  telegraphed  to  Washington, 
imploring  the  repeal  of  the  Gold  bill.  The  whole  country  was  alarmed 
by  the  rocket-like  ascent  of  the  premium  following  its  passage,  and 
Congress,  amazed  and  rebuked  by  the  advance — gold  having  sold  at 
198  on  the  2Oth  of  June,  and  at  250  before  the  end  of  the  month — 
repealed  the  bill  on  the  2d  of  July,  and  the  bears  began  to  breathe  a 
little  more  freely.  Sunday,  and  "  the  Fourth  "  followed,  and  on  the 
morning  of  the  5th,  the  Gold  Room  was  re-opened  ;  but  the  tug  of 
war  had  yet  to  come.  The  bulls  were  prepared  to  twist  the  "  shorts," 
and  as  the  outstanding  contracts  for  future  delivery  were  large,  they 
found  it  easy  to  control  the  floating  supply  of  "  cash  "  gold — that  is 
the  coin  available  for  immediate  delivery — and  so  force  the  bears  to 
buy  to  make  their  deliveries,  unless  they  preferred  the  alternative  of 
borrowing  at  exorbitant  rates  each  day,  to  keep  their  contracts  good. 
The  market  was  virtually  cornered.  The  highest  price  on  the  5th  of 
July  was  249.  On  the  6th,  it  had  risen  to  261 J,  on  the  7th  to  273,  on 
the  8th  to  276^.  On  the  9th  it  remained  steady,  and  on  Monday  the 
nth  leaped  up  to  285.  The  bears  quivered  with  rage  and  excite- 
ment, or  abandoned  the  contest  in  despair.  Gilpin's  News  Room,  at 
the  corner  of  William  street  and  Exchange  Place — to  which  the  gold 
market  had  been  removed  before  this  from  the  Coal  Hole — was  turned 
into  a  scene  of  tumult,  vociferation,  agony,  and  disorder,  that  might 
be  likened,  for  want  of  a  better  illustration,  to  Pandemonium.  Men 
who  were  losing  thousands  every  hour,  or  every  minute,  were  there, 
shouting  themselves  hoarse,  their  hands  uplifted  and  their  eyes  roll- 
ing in  frenzy,  while  their  countenances  indicated  that  they  were 
undergoing  mental  tortures  colloquially  described  as  equal  to  those 
of  the  damned.  Others  were  there,  emboldened  by  and  wildly  elated 
with  their  own  success,  and  tempting  fortune  by  testing  their  luck  to 
the  utmost,  apparently  believing  with  the  poet,  that — 


THE  NEW  YORK  GOLD   ROOM.  H 

"  He  either  fears  his  fate  too  much, 

Or  his  deserts  are  small, 
Who  dares  not  put  it  to  the  touch, 
To  gain,  or  lose,  it  all." 

A  surging,  writhing  mass  of  humanity  shook  the  Gold  Room, 
and  the  sound  of  many  voices  filled  the  air,  while  men  with  anxious 
rind  fevered  faces  rushed  in  and  out  of  the  clamorous  confusion  with  a 
semi-frantic  celerity  such  as  might  have  been  expected  of  them  if 
their  lives  or  fortunes  had  been  dependent  on  the  result  of  a  moment. 
The  din  would  rise  and  fall  like  the  roar  of  a  tempest,  but  every  few 
minutes  new  men  would  rush  in,  and  yell  far  above  the  storm,  and 
then  rush  out  again  after  executing  their  orders ;  and  day  after  day 
the  exciting  drama  of  gold  was  repeated.  Meanwhile  the  whole 
country  looked  on  with  apprehension.  The  "Corner" — for  such  it 
may  be  termed — culminated  on  the  nth  of  July,  and  after  the  Gold 
Room  had  closed  on  that  day,  private  transactions  took  place  at  still 
higher  figures  than  any  chronicled  during  the  regular  hours  of  busi- 
ness, one  of  these,  it  was  rumored,  being  at  a  price  above  300.  But 
although  the  market  had  reached  "  top,"  it  showed  stubbornness  in 
yielding.  On  the  iQth  of  July,  sales  were  made  at  268f,  on  the  6th  of 
August  at  26if ,  and  on  the  2d  of  September  at  254^.  By  the  end 
of  that  month,  however,  there  was  a  decline  to  191  ;  yet  so  erratic  was 
the  course  of  speculation,  that  on  the  Qth  of  November  the  price 
touched  260  again.  On  that  day  General  Sherman  began  his  mem- 
orable and  triumphant  march  through  Georgia  to  the  coast,  and  gold 
never  afterward  reached  that  altitude,  but  on  the  whole  steadily 
declined,  until  it  sold  at  125  in  March  1866,  in  consequence  of  the 
successes  of  the  Union  armies,  culminating  in  the  overthrow  of  the 
rebellion.  This  was  a  lower  point  than  had  been  reached  at  any  time 
since  August  1863,  and  the  extreme  and  rapid  decline  was  as 'much 
due  to  speculation  for  a  fall  as  the  enormous  advance  to  285  had  been 
owing  to  speculation  for  a  rise.  The  loyal  element  was  now  in  the 
ascendant  in  the  Gold  Room,  where  the  rebel  element  had  so  long 
held  sway,  and  where  it  was  forced  at  last  to  speculate  for  a  fall,  or 
accept  the  alternative  of  ruin.  As,  however,  gold  values  for  com- 
modities of  all  kinds  declined  with  the  premium  on  the  precious  metal, 
importers  and  merchants  with  large  stocks  of  foreign  or  domestic 
merchandise,  suffered  heavy  losses  in  consequence,  just  as  they  had 
previously  made  enormous  profits  by  the  rise  in  prices  attending  the 
upward  movement  of  gold.  Although  resulting  in  no  very  serious 
commercial  disturbance,  this  extreme  decline  produced  much  stagna- 


12  THE  NEW  YORK  GOLD  ROOM. 

tion  of  trade,  and  the  business  community  became  as  anxious  and 
impatient  to  witness  an  advance  in  gold,  as  they  had  been  before  to 
promote  a  fall.  The  market  was  largely  "  oversold,"  and  in  June  it 
reacted  to  167^.  The  unsettlement  of  values  produced  by  these 
fluctuations  was  much  deplored  by  conservative  traders,  but  was  the 
life  of  speculation ;  and  strictly  legitimate  trading  was  too  slow  and 
tame  a  way  of  making  or  losing  money  in  the  estimation  of  most  men, 
during  and  for  a  year  or  two  after  the  war,  to  be  attractive.  Games 
of  hazard  seemed  to  be  preferred  to  moderate  certainties,  and  it  was 
not  until  Mr.  McCulloch  had  persevered  in  contracting  the  currency 
for  two  years,  that  people  sobered  down  after  the  prolonged  intoxica- 
tion produced  by  excessive  paper  money  issues  and  gigantic  war 
expenditures.  Congress  passed  the  bill  authorizing  this  contraction 
early  in  April  1866,  by  which  the  total  withdrawal  of  greenbacks 
during  the  six  months  following  its  passage  was  limited  to  ten  millions, 
and  the  contraction  after  that  time  to  four  millions  per  month. 

All  who  applied  were  admitted  to  Gilpin's  News  Room,  to  deal 
in  gold,  on  payment  of  twenty-five  dollars  a  year,  and  as  regards 
light,  air,  and  space,  this  place  was  a  vast  improvement  upon  the 
dingy  Coal  Hole.  On  the  I4th  of  October  1864,  the  most  prominent 
of  the  brokers  and  speculators  in  gold — who  had  been  without  any 
organization  up  to  that  time — met,  after  preliminary  action,  and 
adopted  a  constitution  and  by-laws,  for  the  "  New  York  Gold  Ex- 
change," and  thereupon  proceeded  to  the  election  of  its  officers — 
including  a  president  and  two  vice-presidents,  a  secretary,  and  a 
treasurer — from  among  themselves. 

On  the  3d  of  March  1865,  Congress  passed  an  act — by  which  that 
of  March  3,  1863,  was  virtually  repealed — imposing  a  tax  of  one 
tenth  of  one  per  cent,  on  all  sales,  or  contracts  for  the  sale,  of  coin 
or  bullion  ;  and  with  this  tax,  as  with  the  previous  one  if  paid,  brokers 
uniformly  charged  their  customers,  in  addition  to  the  usual  commis- 
sion of  one  eighth  of  one  per  cent.  But  after  remaining  in  force 
several  years,  it,  with  the  tax  on  sales  generally,  was  abolished,  and 
the  traffic  in  gold  was  entirely  freed  from  legislative  interference. 
Soon  after  its  organization,  the  Gold  Exchange  was  removed  from 
Gilpin's  Room  to  the  premises  at  the  northeast  corner  of  William 
and  Beaver  streets,  previously  occupied  by  the  "  Outside  Board," 
which  subsequently  became  the  "Open  Board"  of  Stock-Brokers. 
There  speculation  was  conducted  in  the  same  rampant  manner  as 
before,  and  the  gold  gamblers,  not  content  with  operating  all  day 
down-town,  speculated  until  late  every  night  up-town  at  the  Evening 


THE   NEW  YORK  GOLD   ROOM.          13 

Exchange — a  Wall  Street  excrescence  of  the  times,  which  was  hap- 
pily uprooted  by  the  action  of  the  Regular  and  Open  Stock  Boards, 
on  the  24th  of  August  1865,  prohibiting  the  attendance  of  their 
members  there  ;  and  to  this  course  the  Gold  Exchange  also  conformed 
on  the  following  morning. 

From  the  ranks  of  demoralized  speculators  at  this  night  haunt, 
men  had  emerged  branded  with  crime,  like  a  member  of  an  old  and 
extensive  banking  house,  who  forged  a  million  and  a  half  of  gold  cer- 
tificates of  the  Bank  of  New  York,  and  lost  their  proceeds,  after 
having  made  and  lost — according  to  his  own  statement — six  millions 
of  profits.  At  the  time  these  forgeries  were  committed,  deliveries 
of  gold  were  commonly  made  by  such  certificates,  issued  against  the 
deposit  of  coin  by  dealers,  an  arrangement  having  been  completed 
with  the  bank  referred  to  for  this  purpose,  in  consequence  of  the 
risks  and  losses  attendant  upon  the  old  method  of  delivering  the 
coin  in  bags,  the  messengers  employed  being  usually  boys,  as  in  the 
case  of  stock  deliveries.  The  messengers  had  in  several  instances 
been  robbed  in  the  open  street,  and  in  others,  had  themselves 
decamped,  or  tried  to  decamp,  with  the  coin,  while  dishonesty  crept 
into  the  practice  in  other  ways.  The  canvas  bags  were  marked  with 
the  amount  of  their  contents,  but  on  counting  the  latter,  it  was  a 
not  uncommon  experience  to  find  one  or  more  coins  missing,  or  to 
detect  a  few  spurious  pieces  in  their  midst,  or  even  lumps  of  lead, 
which  had  been  added  to  make  up  deficiencies  of  weight  caused  by 
the  surreptitious  extraction  of  gold.  As  the  Bank  of  New  York 
gold  certificates  were  declared  by  the  Gold  Exchange  to  be  "  a  good 
delivery,"  they  passed  from  hand  to  hand,  and  were  held  with  as 
much  confidence  as  gold  itself,  and  hence  it  was  that  the  criminal 
mentioned  was  enabled  to  hypothecate  them  in  Wall  Street  as  col- 
lateral for  loans  without  exciting  suspicion,  for  they  were  mere  gold 
checks  drawn  by  the  dealers  having  gold  accounts  with  the  bank,  in 
the  same  manner  as  they  would  have  written  out  an  ordinary  currency 
check,  and  certified  by  the  bank. 

The  discovery  of  these  forgeries  in  August  1865,  naturally  caused 
the  gold  checks  to  be  distrusted,  and  the  Gold  Exchange  in  casting 
about  for  a  surer  means  of  facilitating  the  exchanges  between  brokers, 
hit  upon  the  expedient  of  establishing  the  Gold  Exchange  Bank  as  a 
clearing-house.  The  rule  of  the  latter,  and  also  of  the  Gold  Room, 
is  that  all  dealers  must  hand  in,  before  half  past-twelve,  daily,  a  list  of 
the  parties  to  whom  they  have  to  deliver,  and  from  whom  they  have 
to  receive  gold,  respectively,  with  a  statement  of  the  amounts,  and 


14  THE      NEW      YORK      GOLD      ROOM. 

their  checks  for  the  differences  against  them,  if  there  be  any,  and 
when  the  differences  are  in  their  favor,  the  bank  by  two  o'clock — 
prior  to  which  hour  all  the  exchanges  are  made — gives  its  checks  for 
these,  and  the  business  of  the  bank  for  the  day  may  then  be  considered 
over. 

From  the  William  street  corner,  the  Gold  Room  was  removed  in 
August  1865,  to  the  more  commodious  premises  it  has  since  occupied 
in  New  street,  where  the  familiar  indicator — showing  the  quotation, 
and  denoting  every  change  in  it — looked  out  from  one  of  its  windows 
as  it  had  previously  done  on  Beaver  street,  and  Exchange  Place. 

By  this  time,  however,  the  speedy  termination  of  the  war  was 
foreseen,  and  Chancellorsville,  Shiloh,  Donelson,  Seven  Pines,  and 
the  Wilderness,  had  passed  into  history.  The  wild  fluctuations  with 
which  the  country  had  become  familiar,  were  not  to  continue. 
Fortunes  could  no  longer  be  as  easily  made  or  lost  in  a  day,  in  the 
Gold  Room  as  before,  and  the  great  tide  of  speculation  rolled  on 
with  a  more  even  flow.  The  financial  panic  of  1866  in  London  had, 
however,  some  influence  in  disturbing  it,  after  the  excitement  conse- 
quent on  Lee's  surrender  and  the  capture  of  Mr.  Davis  passed  away. 
It  had  been  the  policy  of  Mr.  McCulloch,  as  it  has  been  that  of  his 
successors,  to  sell  some  of  the  surplus  gold  at  frequent  intervals,  but 
at  that  time  the  sales  were  made  privately,  and  generally  through  one 
man,  who  thus  became  known  as  the  Government  broker.  In  conse- 
quence of  the  panic,  those  indebted  to  Europe,  and  particularly  the 
American  correspondents  of  European  houses  with  cash  balances 
here,  were  instructed  to  make  immediate  remittances  in  gold,  and 
their  purchases  gave  a  strong  upward  tendency  to  the  premium.  It 
afterwards  transpired  that  the  broker  in  question  had  an  order  to  sell 
all  the  gold  the  market  would  take  at  130,  and  fresh  and  more  unfav- 
orable news  from  England  having  arrived  late  in  the  afternoon  of 
the  22d  of  May,  the  price  leaped  above  the  Treasury  limit,  and  the 
broker  indiscreetly  supplied  the  demand  to  a  multitude  of  greedy 
bidders  who  fought  desperately  to  get  as  much  of  what  he  sold  as 
possible.  More  than  thirty  millions  were  thus  disposed  of  before  the 
broker  in  question  retired  from  the  scene  that  evening,  a  piece  of 
Treasury  mismanagement — to  speak  mildly — which  not  only  unduly 
depleted  the  Government  coin  reserve  for  the  benefit  of  the  London 
money  market,  but  gave  the  Treasury  a  much  lower  price  for  the 
gold  than  it  could  have  obtained  by  selling  gradually,  for  on  the  fol- 
lowing day  gold  sold  at  138^,  on  the  second  day  afterwards,  at  14  i-J, 
and  three  weeks  later — on  the  i6th  of  June — at  160.  But  for  this 


THE  NEW  YORK   GOLD   ROOM.  15 

heavy  sale  of  gold,  and  its  consequent  immediate  shipment  to 
England,  the  panic  there  would  probably  have  been  much  more 
disastrous  than  it  actually  was. 

The  price  of  gold  has  always  been  very  sensitive  to  foreign  news  of  a 
disturbing  character,  whether  political  or  financial,  owing  to  the  large 
amount  of  American  securities  held  in  Europe,  the  sympathy  of  the 
premium  with  the  foreign  Exchange  Market,  and  the  immense 
influence  that  war,  to  which  the  United  States  might  be  a  party, 
would  exert  upon  it.  Every  change  in  the  Bank  of  England  rate  of 
discount  has  its  effect  in  raising  or  lowering  the  rate  of  exchange 
for  sterling  at  "  short  sight "  here,  and  indirectly  in  affecting  the 
price  of  gold.  Hence,  unscrupulous  speculators  have  often  con- 
cocted false  cable  despatches,  and  circulated  false  rumors  in  relation 
to  foreign  affairs,  for  the  purpose  of  misleading  others,  and  so  influ- 
encing the  premium.  The  same  has  likewise  been  frequently  done 
by  similarly  disreputable  persons  on  the  Stock  Exchange,  to  influence 
prices  there.  While  Louis  Napoleon  was  on  the  French  throne,  the 
state  of  his  health  was  the  source  of  a  good  many  false  reports,  and 
"the  Man  of  December"  died  many  deaths  in  the  Gold  Room, 
before  war  finally  left  him — a  ruler  no  more — to  expire  in  exile.  The 
effect  of  conflicting  war  news  of  importance  during  the  rebellion  may 
be  imagined  from  the  considerable  fluctuations  which  were  caused 
by  such  minor  matters  as  these  spurious  European  despatches.  There 
was  nothing,  either  at  home  or  abroad,  which  the  most  unscrupulous 
of  the  gold  operators  held  sacred,  when  it.  could  be  used  or  mis- 
represented to  answer  a  temporary  speculative  purpose,  and  this  is 
still  the  case  to  a  certain  extent ;  but  the  fluctuations  being  slight 
compared  with  what  they  had  been,  the  inducement  to  manufacture 
false  reports  was  correspondingly  less.  Most  of  the  members  of -the 
Gold  Exchange — numbering,  in  1874,  about  four  hundred  and 'sixty — 
are  also  members  of  the  Stock  Exchange,  or  of  firms  represented 
there,  and  the  slang  phrases  of  the  street  are  as  much  in  vogue  in 
the  one  place  as  the  other. 

From  1866  to  1874  the  history  of  the  Gold  Room  would  have 
been  monotonous— excepting  a  brief  flurry  at  the  beginning  of  the 
Franco-Prussian  war  in  July  1870,  which  carried  the  premium  up  to 
122},  and  a  decline  following  the  crisis,  in  November  1873,  to  6| — 
but  for  the  remembrance  of  Black  Friday.  The  day  thus  distinguished 
was  the  24th  of  September  1869,  and  it  witnessed  a  rise  in  gold  from 
144^-  on  the  previous  evening,  to  162}  before  noon,  when  the  attempted 
"  corner "  collapsed,  engulfing  the  conspirators  who  had  engineered 


16  THE  NEW  YORK  GOLD  ROOM. 

it  in  difficulties  which  would  have  ruined  any  men  but  those  who  had 
control  of  the  Erie  Railway,  and  a  corrupt  judiciary ;  and  early  in  the 
afternoon  the  price  declined  to  131^.  The  Gold  Exchange  Bank  fail- 
ing to  make  its  clearings,  and  business,  as  a  consequence  was  brought 
to  a  stand  in  the  Gold  Room,  while  a  violent  panic  raged  on  the 
Stock  Exchange,  produced  by  the  distrust,  and  monetary  stringency, 
growing  out  of  the  dead-lock  in  gold.  The  Gold  Room  was  closed 
from  the  morning  of  the  25th  of  September  to  the  5th  of  October, 
when  it  was  re-opened  to  transactions  in  the  clearing  house,  but  it  was 
not  until  the  2ist  of  October  that  the  deferred  clearings  in  the  Gold 
Bank  were  made,  so  that  the  receiver  in  charge  was  enabled  to  de- 
clare his  first  dividend  to  its  creditors.  It  was  then  announced  that 
$310,000  of  its  $500,000  capital  had  been  lost  in  addition  to  its  surplus 
of  $360,000,  but  a  proposition  was  made  to  convert  it  into  a  clearing 
house  only,  and  this  having  been  accepted  by  the  Gold  Room,  it  was 
re-opened  as  such  on  the  22d  of  the  following  November,  and  has 
since  suffered  no  interruption  of  its-business.  As  the  details  of  this 
conspiracy,  and  the  disasters  attending  it,  would  require  the  space 
usually  devoted  to  an  entire  article,  we  are  precluded  from  giving 
them  a  place  in  the  present  paper ;  but  as  one  of  the  great  events  in 
the  history  of  Wall  street,  Black  Friday  will  never  be  forgotten. 

The  history  of  the  Gold  Room  furnishes  a  commentary  on  that  of 
the  United  States  since  the  beginning  of  the  present  era  of  irredeem- 
able currency,  which  is  not  without  value ;  but  much  of  it  will  never 
be  written,  although  it  entered  into  the  daily  life  of  the  people,  and 
while  exerting  an  influence  coextensive  with  the  nation  itself,  passed 
away  unrecorded.  It  is  to  be  found  in  isolated  fragments  engraved 
on  the  tablets  of  human  memory  in  hundreds  of  thousands  of  indi- 
vidual instances,  where  the  fortunes  of  men  were  directly  or  indirectly 
materially  affected  by  it,  and  as  they  die  it  dies  with  them,  reminding 
us  that  all  written  history  must  of  necessity  be  imperfect. 

Every  lover  of  his  country  should  earnestly  desire  to  see  the  day 
when  the  Gold  Room  will  have  become  a  thing  of  the  past,  and 
United  States  notes  be  equivalent  to  gold — the  money  of  the  world. 
And  for  that  consummation  let  us  all  devoutly  labor  and  pray. 


THE  NEW  YORK  STOCK  EXCHANGE. 

ON  Saturday,  the  2oth  of  September,  1873,  to  arrest  the  panic  of 
that  year,  the  New  York  Stock  Exchange  was  suddenly  closed 
by  an  order  of  the  governing  committee.  This  action,  influenced  by 
the  solicitations  of  the  banks,  which  were  in  danger  of  being  engulfed 
in  the  rising  tide  of  ruin,  was  without  a  precedent  in  this  country, 
although  the  recollection  of  a  like  occurrence  in  a  similiar  emergency 
in  Vienna,  was  fresh  in  the  public  mind.  There  were  men  then  who 
shook  their  heads  gravely  as  they  made  their  comments  on  the  unex- 
ampled and  arbitrary  proceeding,  and  said  to  each  other,  "  To  what 
are  we  coming  !  "  as  if  they  saw  in  it  an  indication  of  the  approaching, 
downfall  of  free  institutions  in  America.  But  as  the  Stock  Exchange 
continued  closed  day  after  day,  until  the  morning  of  Tuesday  the 
3Oth  of  that  month  ;  and  the  wild  feeling  of  panic  gradually  subsided 
into  a  settled  but  anxious  calm,  opinions  were  modified,  and  after  it 
had  quietly  re-opened,  men  began  to  think  that  it  was  well  the  panic 
had  been  throttled  even  by  the  use  of  arbitrary  measures.  History 
repeats  itself,  and  in  August,  1875,  we  find  the  San  Francisco  Stock 
Exchange,  in  the  midst  of  a  similar  panic,  produced  by  the  failure  of 
the  Bank  of  California  and  two  other  large  banking  institutions  in  the 
metropolis  of  the  Pacific  slope,  pursuing  the  same  course,  and  with  a 
similarly  sedative  effect. 

These  events  of  themselves  furnish  a  suggestive  commentary  on 
the  financial  operations  and  general  condition  of  affairs  that  produced 
them,  and  are  pregnant  with  both  a  warning  and  a  jnoral  which  those 
who  run  may  read.  Both  the  New  York  panic  of  1873,  and  the  San 
Francisco  panic  of  1875  were  almost  purely  of  a  financial,  as  distin- 
guished from  a  commercial  character.  To  be  sure  they  differed 
immensely  in  extent,  owing  to  the  locality  of  their  origin  ;  the  former 
extending  its  influence  all  over  the  country,  California  excepted,  by 
means  of  the  banks  and  private  bankers,  and  the  latter  being  entirely 
confined  to  that  and  the  neighboring  State  of  Nevada.  California 
has  never  swerved  from  the  specie  standard,  greenbacks  being  simply 
bought  and  sold  there  at  a  discount,  and  not  entering  into  the  circu- 


18  THE      NEW      YORK      STOCK      EXCHANGE. 

lation.  Thus  it  is  isolated  financially  as  well  as  geographically  from 
the  country  east  of  the  Rocky  Mountains,  whither  the  effects  of  the 
Pacific  convulsion  do  not  extend. 

The  immediate  cause  of  the  crisis  of  1873,  and  of  this  crisis  in 
California,  may  be  traced  to  a  similar  origin  in  the  reckless  specula- 
tions of  bankers,  with  the  money  of  depositors,  in  railway  or  othei 
stocks  of  uncertain  or  fictitious  value. 

To  this  "  big  bonanza  "  style  of  banking  may  also  be  attributed 
the  collapse,  at  the  time  of  the  great  crisis,  and  more  recently,  of 
some  of  the  best  known  of  the  houses  accustomed  to  paying  high 
rates  of  interest  on  deposits.  The  pretended  ability  of  such  houses 
to  undertake  mammoth  speculations  entirely  beyond  the  sphere  of 
legitimate  banking,  was  based  neither  upon  their  own  wealth,  nor  any 
other  honest  foundations.  The  disastrous  failures  of  such  houses — 
rendered  inevitable  by  the  hazards  involved — have  inflicted  upon  the 
private  banking  business  a  retributive  blow,  from  which  it  will  be  slow 
in  recovering. 

If  it  be  true  that  like  causes  produce  like  effects,  we  may  expect 
to  see,  to  a  modified  extent,  a  financial  depression  in  California  similar 
to  that  which  has  been  experienced  in  the  Atlantic  States  since  the 
summer  of  1873.  California  alone  has,  until  now,  seemed  to  be 
enjoying  undiminished  prosperity.  The  profits  of  trade  elsewhere 
have  dwindled  into  insignificance  in  comparison  with  those  of  war 
times,  or  given  place  to  balances  on  the  opposite  side  of  the  ledger, 
and  most  men  have  found  their  capital  gradually  shrinking.  Enforced 
economy  has  been  practiced  from  Maine  to  Texas,  and  when  more 
than  forty  millions  of  people  simultaneously  and  persistently  economize, 
the  effect  on  wholesale  and  retail  trade  must  necessarily  be  prodigious. 

The  shrinkage  of  trade,  values,  and  capital,  as  the  result  of  the 
various  causes  alluded  to,  has  proved  a  trying  ordeal  for  all,  and 
to  many  it  has  involved  an  entire  exhaustion  of  resources.  Hence 
commercial  failures  have  been  numerous,  for  with  heavy  expenses 
and  light  receipts  endurance  has  its  limits.  Real  estate,  usually 
the  last  to  yield,  and  the  least  mercurial  of  all  investments,  has 
suffered  severely,  in  common  with  all  other  material  interests,  and 
the  owners  of  heavily  mortgaged  property  have  in  very  numerous 
instances  been  unable  to  pay  the  interest  on  their  mortgages,  much 
less  to  replace  them  at  expiration.  Foreclosures  have  been  the 
result,  and  lands  and  buildings  have  been  sacrificed  at  auction  for  half, 
and  sometimes  even  a  quarter  their  value  before  the  crisis.  The 
foreclosure  suits  begun  in  New  York  city  alone  have  averaged  about 


THE   NEW   YORK  STOCK   EXCHANGE.        19 

five  per  day  for  months  together,  and  the  property  sold  has  been 
almost  invariably  bought  by  the  mortgagees  for  the  amount  of  the 
mortgages,  or  less ;  in  the  latter  case  the  unfortunate  mortgagors 
being  sometimes  harassed  with  judgments  for  deficiency. 

Business  on  the  Stock  Exchange  has  meanwhile  languished  for 
want  of  the  support  of  the  outside  public,  as  people  who  would  other- 
wise have  dabbled  in  stocks,  have  been  too  poor  to  do  so,  and  so  have 
regarded  speculation  as  a  forbidden  luxury.  There  has,  however, 
been  a  steady  demand,  at  advancing  prices,  for  "  Governments  "  and 
first-class  railway  bonds  ;  but  inferior  securities  of  all  kinds  have 
been  studiously  neglected.  Never  in  the  history  of  Wall  street  have 
investors  shown  a  greater  distrust  of  values,  and  never  have  stocks 
been  subjected  to  closer  scrutiny  than  during  the  last  two  years. 
That  large  numbers  have  preferred  to  allow  their  capital  to  remain  idle 
rather  than  to  invest  it  in  any  manner,  has  been  rendered  constantly 
apparent  by  the  unusually  heavy  accumulations  of  deposits  in  the 
New  York  banks,  and  by  the  low  rates  of  interest  prevailing  ;  loans 
on  call  having  been  generally  made  at  two  per  cent,  on  United  States 
bonds  and  other  first-class  collaterals. 

But  the  most  prolonged  stagnation  must  eventually  be  superseded 
by  activity ;  and  just  as  action  follows  reaction,  depression  must  be 
followed  by  buoyancy.  The  wildest  speculations  for  a  rise,  not  only 
in  this  country,  but  in  England,  France,  Germany,  and  elsewhere, 
including  the  South  Sea  bubble  in  the  country  first  named,  and  the 
Tulip  mania  in  Holland,  have  always  succeeded  periods  of  distrust, 
inertia,  and  unduly  depreciated  values.  That  which  has  been  will  be, 
and  those  who  are  now  afraid  to  invest  at  low,  will  be  eager  to  invest 
at  much  higher,  prices.  It  is  the  way  of  the  world.  Example  is 
contagious,  and  men  buy  or  sell,  or  stand  aloof  when  they  see  others 
doing  the  same  thing.  In  controlling  the  popular  mind  in  this  re- 
spect, and  in  their  relations  to  financial  interests  generally,  no  men  in 
the  country  are  possessed  of  greater  influence  than  the  members  of 
the  New  York  Stock  Exchange ;  and  in  view  of  the  importance  of 
the  position  it  has  held,  and  is  likely  to  hold,  in  the  respects  indi- 
cated, we  purpose  to  present  some  statements  in  regard  to  the 
history  and  character  of  this  institution. 

The  Stock  Exchange  is  little  less  than  a  mystery  to  the  uninitiated, 
but  many,  who  are  familiar  with  it  to  their  cost,  see  in  the  stately 
marble  building  on  Broad  street,  a  whited  sepulchre  in  which  their 
fortunes  lie  buried,  and  whose  capacity  for  swallowing  fresh  fortunes 
is  as  unlimited  as  that  of  the  deep  for  ships.  A  treacherous  sea  is 


20       THE   NEW  YORK  STOCK   EXCHANGE. 

that  of  Wall  street,  and  hard  indeed  to  navigate,  if  the  mariner  would 
escape  the  fate  of  the  wrecks  that  too  often  line  its  shores.  Navigators, 
it  is  true,  have  boldly  launched  their  galleys  on  its  tide,  and  after  a 
successful  career  of  freebooting,  brought  again  and  again  into  port  a 
rich  harvest  of  spoils,  only  in  the  end,  however,  to  have  their  glitter- 
ing prizes  filched  away  from  them  in  the  contests  that  are  there  waged 
pretty  much  as  they  were  in  mediaeval  times,  when  the  Mediterranean 
and  the  Adriatic  were  the  scenes  of  action  ;  and  every  merchantman 
fought,  armed  like  a  corsair,  its  way  from  port  to  port,  often  through 
a  series  of  hand-to-hand  combats  with  prowling  buccaneers.  The  sea 
of  Wall  street  is  as  full  of  peril  to  adventurers  as  were  the  waters  of 
Venice  and  Genoa  ;  of  Spain,  Portugal,  or  France; in  the  days  when  the 
feuds  of  state  combined  with  the  lust  of  plunder  to  make  navigation 
an  exciting,  hazardous,  and  warlike  pursuit. 

The  modern  pirates  infesting  this  financial  highway,  are  rich 
and  unscrupulous  speculators,  colloquially  called  "  big  fish,"  whose 
object  is  to  devour  as  much  of  each  other,  and  as  many  of  the  little 
fish  as  possible.  It  is  satisfactory  to  reflect  that  the  righteous  retri- 
bution referred  to  overtakes  them  in  the  end,  and  that  after  catching 
the  many,  they  are  themselves  caught.  But  while  these  great  free- 
booters are  in  the  zenith  of  their  glory  and  prosperity,  they  are  looked 
upon  as  the  winners  of  the  prize  for  which  all  who  tempt  fortune 
by  speculation  on  the  Stock  Exchange,  are  striving — wealth.  One 
example  of  success  lures  thousands  to  their  ruin ;  for  the  multitude 
forget  that  the  instances  where  men  have  made  large  or  small  fortunes 
by  speculation  on  the  Stock  Exchange,  and  succeeded  in  keeping 
them,  are  rare ;  and  that  the  leaders  of  the  "  street  "  enjoy  only  tran- 
sient renown,  invariably  coming  to  grief  sooner  or  later,  unless  death 
interrupts  them  in  their  course.  History  in  Wall  street,  as  in  the 
world  at  large,  is  always  repeating  itself,  and  the  chief  pirate  of  to-day 
will  to-morrow  become  the  prey  of  his  own  wiles,  and  disappear  like  a 
bubble  that  has  burst. 

Failure  has  been  the  final  result  of  every  prolonged  effort  to  con- 
trol the  stock  market,  for  it  is  an  unknown  quantity  which  no  man 
can  measure,  and  he  who  undertakes  to  make  it  subservient  to  his 
own  interests  and  operations  will  inevitably  be  engulfed  in  ruin  if 
he  tries  his  luck  long  enough,  however  great  his  wealth  may  be  ;  and 
though  his  shrewdness  and  courage  never  fail  him.  This  is  one  of 
the  teachings  of  Wall  street  experience  ;  yet  there  are  few  men  who, 
when  once  successful,  can  resist  the  tendency  to  believe  in  themselves  ; 
so,  having  done  much  they  place  unlimited  confidence  in  their  ability 


THE      NEW      YORK      STOCK      EXCHANGE.  21 

to  do  more,  and  lose  all.  They  are  crushed  by  the  power  they  under- 
take to  guide,  for  the  stock  market  is  open  to  the  world,  and  liable  at 
any  time  to  be  governed  by  a  variety  of  influences  beyond  individual 
control;  some,  affecting  the  value  of  particular  securities  only;  aad 
others,  strengthening  or  weakening  confidence  in  securities  generally. 

The  great  speculators  on  the  Stock  Exchange  have  converted 
into  a  gambling  arena  that  which  was  designed  for  legitimate  uses, 
although  speculation  is,  of  course,  inevitable  in  stocks  of  fluctuating 
market  value  ;  and  the  larger  the  amount  of  any  particular  stock 
there  is  in  Wall  street,  the  more  its  price  will  be  found  to  fluctuate ; 
not  because  of  any  changes  occurring  in  its  real  value,  but  because 
speculation  is  more  active  in  stocks  that  are  abundant  than  in  those 
that  are  scarce.  It  is  not  uncommon  for  dividend-paying  railway, 
and  other  shares,  to  rise  or  fall  from  two  to  five  per  cent,  in  a  single 
day,  under  speculative  sales  or  purchases  made  entirely  without  regard 
to  the  question  of  real  values.  The  more  a  stock  is  withdrawn  from 
Wall  street  for  investment,  the  less  active  it  is  likely  to  become,  until 
finally  it  ceases  to  be  dealt  in  on  the  street,  and  the  transactions  in 
it  are  confined  to  investors.  Such  is  the  case  with  Illinois  Central, 
Michigan  Central,  Cleveland  and  Pittsburgh,  and  other  well-known 
railway  stocks  which  were  once  among  the  speculative  favorites  of  the 
Stock  Exchange. 

It  is  a  noteworthy  fact  in  this  connection,  that  the  more  specula- 
tive a  stock  is — in  other  words,  the  more  it  is  held  in  Wall  street — the 
more  corrupt  the  management  of  the  property  it  represents  is  likely 
to  become,  and  vice  versa.  The  managing  directors  of  railways  whose 
stocks  are  the  footballs  of  speculation,  are  notorious  speculators  who 
grow  rich  by  so  managing,  or  mismanaging,  the  affairs  of  their  respec- 
tive corporations,  as  to  divert  much  that  properly  belongs  to  the  stock- 
holders into  their  own  pockets  ;  raising  or  depressing  the  market 
value  of  their  shares,  thus  to  favor  their  own  speculations.  Instead 
of  giving  out  contracts  to  the  lowest  bidders,  they  have  been  known 
to  award  them  indirectly  to  themselves  at  exorbitant  rates,  and  when 
branch  lines  were  to  be  constructed,  they  have  formed  "  rings "  to 
build  them,  and  afterward  turned  them  over  to  their  companies  at  a 
profit  to  themselves  of  from  twenty-five  to  a  hundred  per  cent,  on  the 
actual  cost.  Yet  none  of  them  would  acknowledge  that  in  so  doing 
they  were  swindling  their  stockholders.  When  they  see  fit  to  "  bull  " 
their  own  stocks — that  is,  to  operate  in  them  for  a  rise,  they  show  an 
aptitude  for  painting  everything  connected  with  them  couleur  de  rose ; 
and  whether  dividends  have  been  earned  or  not,  they  are  more  than 


22       THE   NEW  YORK   STOCK   EXCHANGE. 

likely  to  declare  them,  even  if  the  money  for  the  purpose  has  to  be 
borrowed.  If,  on  the  other  hand,  they  see  a  good  opportunity  for  a 
"  bear  "  campaign,  they  sell  their  own  stocks  largely  "  short,"  and 
then  try  to  depress  them  by  all  the  means  at  their  command.  The 
earnings  which  in  a  "  bull "  movement  would  have  been  so  "  cooked  " 
as  to  show  an  increase  over  the  previous  year,  are  made  to  show  a 
large  decrease ;  expenses  for  new  rolling  stock,  and  improvements  of 
the  permanent  way — to  use  the  English  phrase — are  needlessly 
incurred  to  an  extravagant  extent ;  the  floating  debts  are  swelled  to 
unusual  dimensions ;  acceptances  are  freely  given  out  which  are  soon 
offered  for  discount,  and  perhaps  some  of  these  floating  obligations  are 
allowed  to  go  to  protest,  in  order  to  injure  the  credit  of  the  companies 
concerned.  To  cap  the  climax,  dividends  are  passed — that  is  to  say 
not  declared,  and  all  sorts  of  evil  predictions  are  set  afloat  as  to 
the  future,  just  as  during  a  "  bull "  movement  prophesies  would 
be  hazarded  of  a  rise  twenty  or  thirty  per  cent,  greater  than  was 
expected. 

Meanwhile  the  innocent  stockholders,  whose  interests  these  direct- 
ors were  ostensibly  elected  to  protect,  suffer  heavy  losses  by  depre- 
ciation of  their  property ;  for  of  course  stocks  never  fail  to  respond 
to  these  "  inside  "  manipulations.  The  directors  are,  under  these  cir- 
cumstances, in  the  course  of  time  enabled  to  "  cover"  their  "short  " 
contracts  at  a  splendid  profit,  and  at  the  same  time  buy  largely  at 
the  lowest  figures  for  a  fresh  rise,  when  the  tactics  before  described 
are  repeated,  and  the  stocks  that  were  reported  to  have  been  sell- 
ing far  above  their  value,  are  pointed  out  as  the  best  purchases  on 
the  list.  Such  is  the  consistency  and  morality  of  many  of  the  specu- 
lative railway  directors  who  ignore  their  trusts,  and  make  a  practice  of 
treating  the  roads  they  manage  as  if  they  were  their  own  private  prop- 
erty ;  and  who,  worse  than  all,  can  do  these  things  with  impunity,  for 
practically,  so  far  as  plundering  the  stockholders  is  concerned,  they 
seem  to  be  a  law  unto  themselves.  There  are  some  honest  men,  even 
among  the  directors  of  corporations  controlled  by  knaves,  but  they 
are  merely  respectable  dummies,  without  a  proper  sense  of  their  own 
responsibility,  or  they  would  refuse  to  act  with  corrupt  executive 
officers  when  their  corruption  is  as  notorious  as  in  the  case  of  several 
prominent  corporations  whose  shares  are  dealt  in  on  the  Stock 
Exchange.  The  time  will  probably  come,  however,  and  the  sooner 
the  better,  when  laws  will  be  passed  and  enforced,  either  by  Congress 
or  all  of  the  States,  for  the  punishment  of  frauds  upon  stockholders 
by  directors,  and  disqualifying  for  office  those  detected  in  selling  their 


THE   NEW   YORK   STOCK   EXCHANGE.       33 

company's  stock  "  short,"  with  the  obvious  intention  to  depreciate  its 
market  value. 

It  is  a  well  known  fact  that  the  railways  whose  stocks  have  been 
taken  out  of  Wall  street  by  investors,  are  much  more  honestly  and 
efficiently  managed  than  they  were  before  this  change  took  place, 
owing  to  the  fact  that  inducements  to  mismanage  them  for  specula- 
tive effect  on  the  Stock  Exchange  have  passed  away.  Moreover, 
railways  and  other  properties  whose  stocks  have  been  absorbed  by 
investors,  attract  a  different  class  of  men  to  their  direction.  The 
rich  and  desperate  speculators  of  Wall  street  fight  only  for  the  control 
of  companies  whose  shares  are  active  on  the  speculative  list,  and  which 
they  can  manipulate  pretty  much  as  they  please  after  once  securing 
management.  They  find  it  an  easy  matter  to  vote  themselves  in,  and 
to  keep  themselves  in  afterward,  provided  they  have  the  necessary 
cash  for  controlling  a  majority  of  the  capital  stock  at  the  time  the 
transfer  books  close,  preparatory  to  the  annual  election.  Immediately 
after,  they  can  sell  the  whole  of  their  holdings,  if  they  choose,  without 
impairing  their  right  to  vote  on  the  stock  thus  transferred  to  their  own 
names,  or  to  the  names  of  those  whose  proxies  they  hold.  Properties 
that  are  held  for  investment  exclusively,  can  not  be  bought  up  and 
sold  out  in  this  convenient  manner,  and  the  real  stockholders,  as  dis- 
tinguished from  the  temporary  speculative  holders,  have  the  control 
of  the  management  in  their  own  hands.  Hence  the  Wall  street  specu- 
lators, who  mismanage  a  number  of  large  corporations  there  repre- 
sented, can  not  secure  a  majority  of  the  stock  of  these  investment 
properties ;  and,  if  they  could,  would  be  unable  to  make  money  out  of 
them  in  Wall  street.  They  make  no  attempt,  therefore,  to  vote 
themselves  into  power  in  such  quarters,  and  the  happy  stockholders 
continue  to  draw  dividends,  which  they  would  probably  fail  to  receive 
if  they  were  left  to  the  tender  mercies  of  corrupt  speculative  directors. 

One  prominent  and  honorable  exception  to  the  rule  of  rascality  in 
the  management  of  railways  represented  by  speculative  stocks  in 
Wall  street  is,  however,  to  be  found  in  the  companies  controlled  by 
an  executive  whose  object  has  always  been  to  improve  the  properties 
under  his  direction,  and  who,  whatever  his  faults  may  be  in  the  par- 
simonious treatment  of  the  traveling  public,  has  never  been  known  to 
sell  "  short  "  a  stock  in  which  he  was  interested.  He  has  proved  that 
honesty  is  the  best  policy,  apart  from  any  nobler  motive  ;  for  having 
invested  his  wealth  in  the  corporations  he  manages,  he  has  reaped  his 
reward  both  in  dividends  and  the  large  advance  in  prices  that  has 
taken  place  under  his  regime.  The  price  and  stability  of  New  York 


24       THE   NEW   YORK   STOCK   EXCHANGE. 

Central  and  Hudson  stock,  notwithstanding  its  enormous  "  waterings  " 
for  the  benefit  of  stockholders,  furnishes  a  sufficient  commentary  on 
the  difference  between  his  management  and  that  of  the  average 
speculative  director,  who  is  no  more  fit  to  be  the  custodian  of  other 
people's  property,  than  a  footpad  is  to  be  the  cashier  of  a  bank. 

We  have  dwelt  thus  much  on  this  subject  because  the  transactions 
in  railway  securities  form  nine-tenths  of  the  daily  business  of  the 
Stock  Exchange,  the  only  prominent  speculative  stocks  not  included 
in  the  railway  list  being  Western  Union  Telegraph,  and  Pacific  Mail; 
and  it  is  well  that  the  reader  unfamiliar  with  the  inside  workings  of 
Wall  street,  should  be  made  aware  of  the  influences  to  which  they  are 
subjected  by  the  director  of  the  period. 

The  Stock  Exchange  is  of  such  recent  origin  in  New  York  that 
some  of  its  original  members  are  still  living  to  tell  of  the  time  when 
they  gathered  under  a  sycamore  tree  in  Wall  street,  opposite  the 
Tontine  coffee-house,  between  William  and  Hanover  streets,  to  deal 
in  such  United  States  stocks  and  miscellaneous  securities  as  then 
existed.  It  was  not  until  the  year  1817  that  the  stockbrokers'  busi- 
ness had  developed  sufficiently  to  make  it  an  object  for  the  few  gen- 
tlemen who  met  once  or  twice  a  day  under  the  tree — or  in  the  coffee- 
house if  the  weather  was  unpropitious — to  devote  to  it  their  whole 
time,  which  in  most  instances  they  had  previously  divided  between  that 
and  other  occupations.  Then  they  took  up  their  quarters  in  the  office 
of  Samuel  Beebe,  one  of  their  number,  and  resolved  to  organize  them- 
selves into  a  board  of  brokers  ;  to  that  end  they  deputed  Mr.  William 
Lawton,  also  one  of  the  fraternity,  and  still  a  surviving  member,  to 
proceed  to  Philadelphia,  which  already  had  a  stock  exchange,  and 
there  gather  such  particulars  concerning  the  latter,  and  its  rules  and 
regulations,  as  would  enable  them  to  act  the  more  intelligently  in 
drawing  up  articles  of  association,  and  by-laws,  for  their  own  gov- 
ernment. The  mission  was  accomplished,  and  the  board  was  organ- 
ized immediately  thereafter  on  the  basis  of  that  of  Philadelphia,  its 
first  constitution  bearing  date  the  same  year,  1817.  The  earliest  record 
of  the  New  York  stockbrokers,  however,  is  a  document  dated  the  J7th 
of  May,  1792,  now  in  the  possession  of  the  Stock  Exchange,  and 
signed  by  the  few  brokers  of  that  day,  in  which  they  agreed  not  to 
buy  or  sell  stocks  on  commission  for  less  than. one  quarter  of  one 
per  cent.,  showing  conclusively  that  the  existence  of  stock  brokerage 
preceded  by  more  than  a  quarter  of  a  century  that  of  the  organization 
of  the  brokers  into  a  guild. 

It  is  probable  that  the  first  dealings  in  Wall  street,  aside  from  real 


THE  NEW   YORK   STOCK   EXCHANGE.       25 

estate,  were  in  the  old  Continental  money  of  the  Revolution,  before  it 
had  gone  the  way  of  the  French  assignats  by  depreciating  in  value  to 
that  of  the  rags  from  which  it  was  made ;  but  not  even  tradition 
remains  to  tell  of  the  doings  of  the  earliest  money-changers  within 
its  limits.  Until  the  war  of  1812,  however,  there  was  doubtless 
little  for  stockbrokers  to  do ;  but  then  the  United  States  government 
issued  bonds  and  Treasury  notes,  while  new  banks  were  established, 
and  trade  and  speculation  became  more  active  than  at  any  previous 
period  in  American  history. 

The  annual  dues  of  the  New  Board  of  Brokers,  as  it  was  called, 
were  twenty-five  dollars,  and  its  transactions  were  at  first  confined 
almost  entirely  to  United  States  bank  stock,  United  States  sixes,  and 
foreign  exchange.  By  1825  the  initiation  fee  had  been  advanced  to  a 
hundred  dollars,  and  by  degrees  this  was  further  increased  to  three 
thousand,  at  which  it  stood  in  1865  ;  clerks  who  had  served  two  years 
or  more  being,  however,  admitted  for  half  the  regular  fee. 

The  Board  of  Brokers  changed  its  quarters  from  room  to  room  in 
Wall  street,  in  the  vicinity  of  William  street,  several  times  subsequently 
to  its  organization  ;  and  then  into  William  street  where  the  Custom-house 
now  stands,  before  it  removed,  in  1855,  to  "  'Change  Alley,"  between 
Exchange  Place  and  Beaver  street,  where  it  was  found  at  the  beginning 
of  the  war  in  1861.  Not  until  that  time  did  the  New  York  Stock  Ex- 
change loom  up  into  great  national  importance,  although  its  business 
had  been  steadily  increasing  from  year  to  year,  since  the  time  of 
its  organization,  owing  to  the  increasing  volume  of  the  securities 
of  the  country.  Notwithstanding  the  fact  that  the  Stock  Exchange 
was  of  such  recent  origin,  the  development  of  railway  interests  was 
more  recent  still.  The  first  sixty-nine  miles — from  Baltimore  to  the 
Point  of  Rocks,  of  the  first  road  built  in  the  United  States,  the  Balti^ 
more  and  Ohio  begun  in  1828 — were  not  completed  and  opened  until 
1832  ;  and  as  line  after  line  was  projected  and  laid,  their  stocks  and  bonds 
found  their  way  to  Wall  street,  and  became  things  of  speculation. 

The  war  of  the  rebellion  brought  to  the  Stock  Exchange  an  immense 
accession  of  business,  both  in  the  enormous  amount  of  United  States 
and  State  securities  it  created  ;  and  in  the  tremendous  impetus  it  gave 
to  speculation  in  stocks  of  all  kinds,  one  result  of  which  was  the  estab- 
lishment of  an  opposition  organization,  more  in  accordance  with  the  pop- 
ular taste  and  requirements,  and  known  as  the  Open  Board.  But  not- 
withstanding this  competition  the  old  board  grew  stronger  and  richer, 
and  built  for  itself  the  costly  marble  structure  it  occupies  to-day,  and, 
after  moving  into' it,  on  the  Qth  of  December,  1865,  amalgamated  with 


26  THE     NEW      YORK      STOCK      EXCHANGE. 

its  successful  rival.  This  occurred  suddenly,  on  the  8th  of  May,  1869, 
when  the  Open  Board,  which  had  done  more  business  by  far  than  the 
Regular  Board,  became  a  thing  of  the  past,  and  about  six  hundred  new 
members  were  added  to  the  Stock  Exchange,  swelling  the  aggregate 
number  to  a  little  more  than  a  thousand,  at  which  it  still  stands. 
Shortly  afterward,  the  board  voted  that  the  price  of  membership 
should  be  raised  to  ten  thousand  dollars,  but  that  any  member  might 
sell  his  seat  for  any  sum  he  pleased,  and  the  buyer,  if  acceptable  to 
the  examining  committee,  should  be  admitted  in  his  stead  on  payment 
of  an  initiation  fee  of  five  hundred  dollars  ;  and  since  that  time  the 
price  of  seats  has  varied  from  twenty-three  hundred  to  nearly  eight 
thousand  dollars,  the  average  having  been  about  four  thousand.  If  a 
member  become  insolvent,  and  fail  to  settle  with  his  creditors,  his 
seat  is  sold  after  the  lapse  of  a  year,  for  their  benefit ;  and  if  he  die 
insolvent  the  rule  is  the  same ;  otherwise  at  his  death  his  legal  repre- 
sentatives are  entitled  to  the  proceeds  of  the  sale  of  his  seat  at  the 
best  price  the  secretary  can  obtain,  and  also  to  receive  ten  thousand 
dollars  in  cash  from  the  life  assurance  fund  ;  the  Stock  Exchange  hav- 
ing adopted,  in  1873,  a  plan  by  which  the  life  of  each  of  its  members  is 
insured  for  the  amount  mentioned,  and  in  order  to  provide  for  which 
every  member  is  taxed  ten  dollars  whenever  a  death  occurs  in  the 
membership.*  This  is  a  wise  provision,  in  view  of  the  financial  vicis- 
situdes of  a  stockbroker's  life,  and  the  improvidence  of  brokers  as  a 
class ;  for  it  has  often  happened  that  members  have  died,  leaving 
their  families  destitute,  and  appeals  have  been  made  to  the  board  for 
subscriptions  to  defray  their  funeral  expenses,  and  to  relieve  the 
urgent  wants  of  widows  and  children  left  to  the  charity  of  the  world. 
The  Stock  Exchange,  under  its  present  constitution,  adopted  in 
1869,  is  managed  by  a  governing  committee  of  forty  members,  in 
addition  to  its  president,  treasurer,  and  secretary,  who  are  members 
ex  officio.  These  are  chosen  by  ballot,  and  divided  into  four  classes 
of  equal  number,  the  first  class  being  elected  to  serve  one  year,  the 
second  two  years,  the  third  three  years,  and  the  fourth  four  years — 
an  arrangement  which  involves  the  election  of  ten  new  members 
annually  on  the  second  Monday  in  May.  This  governing  committee 
appoints  from  its  own  members  ten  standing  committees,  namely: 
on  Finance,  Arrangements,  Admissions,  Securities,  United  States 
Bonds,  the  Stock  List,  Arbitration,  Law,  Printing,  and  Commissions ; 

*  In  order  to  ultimately  relieve  the  members  from  this  tax,  a  Gratuity  Fund  has  been 
established,  by  which  this  benevolent  system  is  expected  to  become  self-supporting  after 
the  year  1886. 


THE  NEW   YORK  STOCK   EXCHANGE.       27 

to  each  of  which,  according  to  its  character,  the  business  of  the  ex- 
change is  appropriately  referred,  except  such  as  comes  before  the 
governing  committee  as  a  body ;  and  the  latter  meet  as  often  as  the 
necessity  arises. 

The  office  of  the  President  of  the  Exchange  is  honorary,  but  the 
chairman,  vice-chairman,  treasurer,  secretary,  and  roll-keeper  are 
salaried  officers,  whose  pay  is  sufficiently  good  to  exceed  the  incomes 
of  a  majority  of  their  fellow-members,  and  to  make  them  reconciled 
to  their  lot.  The  duty  of  the  chairman,  who  receives  $7,000  per 
annum,  is  to  preside  over  the  Board  during  the  regular  hours  of 
business,  namely,  from  ten  to  three  oclock ;  to  call  stocks  twice  a 
day,  at  half-past  ten,  and  at  one  oclock ;  to  maintain  order  and 
enforce  the  rules,  which  functions,  in  his  absence,  devolve  upon 
the  vice-chairman,  who  receives  $5,000  per  annum.  The  calls  of 
securities  in  the  government  and  bond  department,  also  devolve  on 
these  officers.  Both  government,  State,  and  bank  stocks,  and  rail- 
way bonds,  are  dealt  in,  in  a  room  on  the  floor  above  that  devoted 
to  the  railway  shares  and  other  speculative  stocks.  United  States 
securities  are  "called"  there  three  times  a  day,  namely,  at  10.15 
and  11.30  A.  M.  and  2  P.  M.,  while  State  and  railway  bonds  and  bank 
stocks  are  called  immediately  after  the  second  call  of  governments, 
about  noon,  and  State  stocks  again  after  governments  at  two  P.  M.,  at 
which  time  any  broker  wishing  to  deal  in  railway  bonds  or  bank  stocks, 
can  call  up  any  particular  one  of  these  he  wishes  to  buy  or  sell. 

This  leaves  the  hall,  or  Long  Room  on  the  ground  floor — where  the 
real  business  of  the  Exchange  is  done — exclusively  to  those  dealing 
in  railway  and  miscellaneous  shares.  The  latter  apartment  is  a  large 
parallelogram  with  a  very  high  ceiling,  and  long  windows  looking  out 
on  New  street,  although  it  has  entrances  not  only  from  this  thorough- 
fare, but  from  both  Broad  and  Wall  streets.  It  is  unfurnished,  with 
the  exception  of  a  dais  at  the  Wall  street  end  for  the  presiding  officers. 
It  has  an  upper  gallery  for  strangers ;  a  place  railed  off  for  those  who 
pay  a  hundred  dollars  a  year  for  the  privilege  of  seeing  the  market, 
and  of  communicating  with  their  brokers  on  the  floor;  and  telegraphic 
stock  indicators  which  report  the  transactions — the  same  as  those  found 
in  every  broker's  office,  and  for  the  use  of  which  a  dollar  a  day  is 
charged,  exclusive  of  the  original  cost  of  the  instrument,  a  hundred 
dollars.  And  in  the  business  of  telegraphing  stock  quotations  there 
are  at  present  two  rival  companies  engaged,  both  industriously  glean- 
ing the  transactions  from  members  in  the  room  as  fast  as  they  are 
made,  and  dispatching  them  over  the  wires  almost  instantaneously. 


28       THE  NEW   YORK   STOCK  EXCHANGE. 

The  entrance  of  the  Stock  Exchange  on  Broad  street,  leads  into  a 
spacious  ante-room  provided  on  each  side  with  seats,  and  the  members, 
with  those  referred  to  as  paying  a  hundred  dollars,  are  alone  per- 
mitted to  occupy  them.  The  Long  Room  itself  occupies  only  a  small 
part  of  the  spacious  building,  whose  upper  floors  are  devoted  to 
committee  rooms,  and  other  apartments,  including  that  in  which 
"governments"  and  bonds  are  called ;  and  whose  basement  is  honey- 
combed with  fire-proof  receptacles  for  the  valuables  of  brokers  and 
others,  who  daily  about  three  P.  M.,  flock,  with  boxes  more  or  less  full 
of  securities,  to  the  safe  deposit  department  of  the  Stock  Exchange, 
often  accompanied  by  protecting  clerks  to  guard  against  the  felonious 
appropriation  of  their  treasures  by  lurking  thieves. 

Originally  the  Board  Room  in  this  new  building  was  on  the  second 
floor,  where  the  Government  and  bond  department  now  is ;  the  lower 
floor  was  then  given  up  to  the  members  of  the  Open  Board,  and  others 
who  paid  a  hundred  dollars  a  year  for  admission,  with  the  privilege 
of  dealing  there  among  themselves.  Hence,  there  were  two  markets 
for  stocks  open  under  the  one  roof  simultaneously — the  Regular  Board 
and  the  Long  Room — the  great  bulk  of  the  business  being  done  in 
the  latter  by  members  of  the  opposition  board.  After  the  union  of 
the  two  organizations,  to  accommodate  the  augmented  numbers,  ex- 
tensive alterations  were  made  at  great  expense,  resulting  in  the  present 
arrangements.  There  is  now  no  outside  market  for  stocks,  the  business 
being  transacted  exclusively  between  members  of  the  Exchange  in  the 
appointed  places.  Neither  is  there  any  crowding  of  the  members  from 
the  Stock  Exchange  building  to  the  strdet,  after  five  P.  M.  as  was  for- 
merly the  custom,  the  market  being  afterward  kept  open  in  Broad  street 
till  six  o'clock  in  the  evening.  The  sensible  rule  of  confining  business 
to  the  hours  between  ten  and  three  has  worked  well,*  and  is  an  immense 
improvement  upon  the  old  war-time  habit  of  opening  the  market  at 
about  nine  A.  M.  and  closing  it  at  about  six  P.  M.,  only  to  re-open  it 
at  eight  P.  M.,  at  the  evening  exchange  up-town,  to  continue  in  the 
midst  of  feverish  excitement  till  within  an  hour  or  two  of  midnight. 
The  life  that  stock  and  gold  brokers  led  then  was  slow  suicide,  and 
not  very  slow  either,  to  some  of  them. 

The  Evening  Exchange  indeed  did  much  to  foster  reckless  specula- 
tion and  its  final  abolition  in  August,  1865,  by  a  vote  of  both  the  Stock 
Exchange  and  Gold  Board,  was  almost  a  cause  for  public  rejoicing,  so 
much  had  the  business  transacted  there  degenerated  into  mere 
gambling.  Within,  its  precincts  at  the  Fifth  Avenue  Hotel,  and 

*  A  fine  of  $50  is  imposed  for  dealing  in  securities  outside  these  hours. 


THE      NEW      YORK      STOCK      EXCHANGE.  29 

afterward  at  the  corner  of  Broadway  and  Twenty-third  street,  before 
its  removal  to  what  proved  to  be  its  tomb,  in  Twenty-fourth  street, 
spirituous  liquors  were  dispensed  from  a  bar  which  did  a  thriving  busi- 
ness, and  paved  the  way  to  the  physical,  mental,  and  financial  ruin  of 
its  patrons.  Men  under  the  influence  of  the  stimulants  imbibed  often 
bid  for  or  offered  stocks  or  gold  in  the  most  reckless  manner,  and  awoke 
the  next  morning  to  find  that  they  had  made  contracts  which  they 
would  certainly  not  have  entered  into  except  in  the  feverish  excite- 
ment of  the  hour.  Brokers  and  speculators  seemed  to  have  no  time 
for  sleep,  and  burned  the  candle  of  life  at  both  ends  in  dissipation  and 
eager  worship  of  Mammon.  Gold  often  fluctuated  from  five  to  ten 
per  cent,  in  a  day,  and  stocks  experienced  similar  eccentric  move- 
ments. Demoralized  by  such  surroundings,  and  venturing  beyond 
their  depth,  men  frequently  found  themselves  hopelessly  ruined.  In 
such  a  hot-bed  of  vice,  extravagance,  and  fraud,  men  had  few  aspira- 
tions toward  pure  and  noble  lives.  The  acquisition  of  lucre  seemed  the 
end  and  aim  of  existence,  and  from  their  midst  forgers  and  defaulters 
emerged  from  time  to  time,  as  if  to  warn  others  who  were  treading  in 
their  footsteps  of  the  dangers  of  the  way.  All  members  are  now 
required  to  have  a  place  of  business,  besides  the  Stock  Exchange, 
where  comparisons  of  sales  and  purchases  of  stocks  may  be  made  ;  and 
are  prohibited  from  entering  into  partnership  with  those  under  sus- 
pension, or  other  insolvent  persons.  Although  they  may  sell  "  priv- 
ileges "  to  receive  or  deliver  stocks  in  all  their  forms — namely,  "  puts," 
"  calls,"  "  spreads,"  and  "  straddles,"  no  offer  to  buy  or  sell  them  is 
allowed  to  be  made  publicly  at  the  Exchange. 

These  privileges  are  usually  sold  by  large  speculators  and  specula- 
tive brokers  for  a  certain  percentage,  generally  one  per  cent,  for  puts 
and  calls,  and  two  or  three  per  cent,  for  the  two  last  mentioned,  for 
thirty  days,  and  if  the  bankers  fail  to  honor  them,  either  through 
fraudulent  intent  or  accidental  failure,  they  prove  "  a  delusion  and  a 
snare  "  of  a  costly  character,  for  not  only  has  the  amount  paid  for  them 
— ranging  from  one  to  three  hundred  dollars  for  each  hundred  shares — 
been  thrown  away  in  that  case,  but  stock  may  have  been  bought  or 
sold  against  them,  involving  heavy  losses.  They  are  useful  as  an 
insurance  against  unlimited  loss,  but  those  who  buy  them  generally 
fail  to  make  half  as  much  out  of  them  as  they  have  to  pay  for  them, 
and  it  is  little  better  than  squandering  money  to  invest  it  on  their 
purchase,  whereas  it  is  commonly  very  profitable  to  make  and  sell 
them,  but  panics  and  other  unlooked-for  events  occasionally  occur 


30  THE      NEW     YORK      STOCK      EXCHANGE. 

which   make   privileges  very  valuable  to  the  holders  and  correspond- 
ingly unprofitable  to  the  makers. 

"  A  "  put  "  confers  the  privilege  on  the  bearer  of  delivering  to  the 
maker  a  certain  number  of  shares  of  a  certain  stock  within  a  certain 
time,  and  a  "  call"  entitles  the  holder  to  receive  in  the  same  way. 
A  "  straddle  "  gives  the  holder  the  option  of  either  receiving  or 
delivering  at  a  certain  price,  and  the  only  difference  between  this  and 
a  "  spread,"  is  that  the  market  price  at  the  time  of  purchase  is  the 
one  invariably  filled  into  the  latter,  while  the  price  in  the  former  may 
vary  much  or  little  from  it  according  to  agreement  or  otherwise. 

Some  of  the  cant  terms  of  Wall  street  are  incomprehensible  jargon 
to  those  who  have  never  taken  "  a  flyer," — or  made  a  speculative 
operation  in  stocks  ;  but  there  are  few  unaware  that  a  "  bull "  is  a. 
speculator  for  a  rise,  while  a  "  bear  "  is  one  for  a  fall  in  price,  and  that 
when  a  stock  is  "  cornered,"  the  whole  of  it  is  held  in  the  grip  of  a 
bull  clique  that  refuses  to  sell  any  except  at  its  own  price,  which  is 
always  a  very  high  one.  Cornering  operations  are  always  vefy 
hazardous,  and  generally  losing  speculations  to  the  parties  engaged 
in  them,  and  they  are  never  undertaken  except  where  there  is  an 
unusually  large  "  short  "  interest  to  be  entrapped,  The  process  of 
"  squeezing  the  shorts"  then  becomes  both  severe  and  interesting,  and 
the  bears  are  bled  and  slaughtered  remorselessly  until  they  have  all 
bought  in  to  "  cover  their  shorts,"  or  in  other  words,  closed  their  con- 
tracts, when  the  cornerers  are  left  with  the  cornered  stocks  on  hand, 
which  both  the  street  and  the  outside  public  are  signally  afraid  of 
touching  for  a  very  long  time  afterward,  thus  leaving  the  entire  bur 
den  to  be  borne  by  the  bulls  concerned. 

Cliques  and  large  speculators  are  said  to  "  milk  the  street  "  when 
they  make  prices  perform  a  see-saw  movement  up  and  down,  to 
deceive  operators,  and  stocks  are  "  washed  "  when  corresponding  sales 
and  purchases,  called  "  washes,"  are  made  to  influence  prices  and 
make  the  market  artificially  active  in  order  to  induce  operations  by 
others.  They  are  "  watered  "  when  their  amount  is  increased,  as,  for 
instance,  by  stock  dividends — the  eighty  per  cent,  of  scrip  issued  by 
the  New  York  Central  and  Hudson  River  Railway  Company  at  the 
time  of  the  consolidation  in  December,  1868,  being  a  case  in  point. 
They  are  "  carried  "  when  they  are  held  by  a  broker  on  speculative 
account,  and  they  are  called  "  collaterals  "  when  money  is  borrowed 
upon  them;  and  they  are  described  as  "traps,"  when  of  little  or 
no  value. 

A  "bull"  sells  only  "long  stock,"  just  as  a  "bear"  sells  only 


THE  NEW   YORK   STOCK   EXCHANGE.       31 

"short  stock,"  and  when  the  latter  buys  it  is  only  to  deliver  against 
previous  sales,  or  to  return  borrowed  stock.  A  "  pool "  embraces  the 
funds  of  a  combination  of  individuals  formed  to  carry  out  some  spec- 
ulative object,  and  "a  leak  in  the  pool"  expresses  that  some  one 
belonging  to  it  is  privately  operating  in  bad  faith  outside  of  it  for  his 
own  advantage  at  the  expense  of  his  associates.  A  "  point  "  is  a  piece 
of  confidential  information,  generally  to  buy  or  sell  a  particular  stock, 
and  as  points  are  frequently  given  out  from  interested  motives,  it  is 
prudent  to  turn  a  deaf  ear  to  them  except  when  coming  from  an 
unquestioned  source,  for  many  a  speculator  has  had  his  margin  ex 
hausted,  and  been  "  sold  out "  by  his  broker  in  consequence  of  putting 
faith  in  them.  A  number  of  other  words  and  phrases  might  be 
quoted  in  illustration  of  the  slang  "of  the  street  "—as  Wall  street, 
which  derived  its  name  from  the  fortified  northern  boundary  wall  of 
the  settlement  of  Manhattan — is  called  by  its  habitues,  but  the  most 
important  have  already  been  enumerated. 

^  Any  one  is  eligible  to  become  a  member  of  the  Stock  Exchange 
who  is  over  twenty-one  years  of  age,  and  who  has  been  a  banker, 
broker,  or  dealer  in  stocks  in  the  city  of  New  York,  for  one  year,  or 
a  clerk  to  a  member  for  two  years ;  and  any  member  who  fails  to 
meet  his  contracts,  is  thereupon  suspended  from  membership,  but  may 
be  readmitted  by  a  vote  of  two-thirds  of  the  governing  committee, 
after  he  has  effected  a  settlement  with  his  creditors,  the  nature  of 
which  he  must  explain  to  the  committee  at  the  time  of  his  application 
for  readmission.  It  is  not  an  uncommon  experience  for  members  to 
have  failed  several  times,  and  to  have  been  promptly  readmitted  after 
each  settlement ;  and  as  a  rule,  brokers  are  so  lenient  toward  each 
other,  that  settlements  are  easy — perhaps  too  easy  for  some  of  the 
reckless  operators  among  them,  who  abuse  the  credit  which  their 
membership  affords.  If,  however,  a  member  is  guilty  of  fraud,  he  is 
liable. to  expulsion  by  a  two-thirds  vote  of  the  governing  committee, 
whose  decisions  are  prompt  and  exemplary ;  and  where  reckless  and 
unbusiness-like  habits  have  led  to  suspension,  they  may  also,  by  a 
majority  vote  of  the  Committee  on  Admissions,  debar  the  reinstate 
ment  of  a  member. 

Until  the  spring  of  1875  the  usual  rate  of  commission  charged  by 
brokers  to  their  customers,  was  an  eighth  of  one  per  cent,  for  either 
buying  or  selling,  but  they  were  permitted  to  charge  as  low  as  a  six- 
teenth, and  in  the  case  of  regular  investors  as  high  as  a  quarter  on 
the  par  value  of  securities.  Brokers  acting  for  other  brokers,  however, 
could  buy  or  sell  at  a  rate  as  low  as  two  dollars  per  hundred  shares, 


THE      NEW      YORK      STOCK      EXCHANGE. 

which  was  the  invariable  charge  in  such  cases ;  and  the  penalty  for 
doing  business  below  the  minimum  rates  was  expulsion.  At  the  time 
mentioned,  however,  a  large  majority  of  the  brokers  voted  in  favor  of 
raising  the  rate  on  all  transactions,  for  customers  not  members  of  the 
Board,  to  not  less  than  an  eighth  per  cent.,  and  on  those  for  fellow- 
members  to  a  sixteenth,  except  where  the  principal  is  substituted  for 
the  broker  during  business  hours  on  the  day  of  the  transaction,  in 
which  case  the  rate  should  be  not  less  than  a  thirty-second,  while  to 
investors  it  should  remain  unaltered  :  that  on  government  securities 
being  fixed  at  a  sixteenth;  a  violation  of  this  rule  to  involve  expul- 
sion of  any  member  guilty  of  it.  And  this  rule  still  remains  in 
force,  while  under  no  circumstances  is  one  broker  allowed  to  do  busi- 
ness for  another,  or  for  any  person,  without  remuneration.  Members, 
or  their  firms,  can,  however,  be  represented  at  the  Board  by  a  clerk  on  a 
salary,  acting  under  a  power  of  attorney.  These  restrictions  were  im- 
posed for  the  protection  of  the  business  of  the  association  against  mem- 
bers disposed  to  "  cut  under  "  their  fellows  in  the  matter  of  commis- 
sions ;  and  before  any  were  adopted,  stocks  were  frequently  bought  and 
sold  for  brokers  at  as  low  a  rate  as  a  dollar  per  hundred  shares.  The 
fact  is,  that  except  in  times  of  speculative  excitement,  there  are  far  too 
many  brokers  for  the  business,  and  the  competition  among  them  is 
very  keen.  One  result  of  this  is  that  most  of  them  being  unable  to 
get  orders  to  execute  on  commission,  are  led  to  speculate  in  the 
effort  to  make  a  living,  but  it  by  no  means  follows  that  they  generally 
succeed  in  their  object.  Even  the  most  alert  of  the  "  scalpers  " — as 
those  who  buy  and  sell  in  the  hope  of  making  an  eighth  per  cent,  are 
called — are  not  commonly  found  to  last  very  long,  but  gradually 
decline  into  a  kind  of  pecuniary  marasmus,  and  in  the  end  vanish  from 
the  Board,  no  one  knows  how  or  why. 

Stocks  are  usually  bought  and  sold  in  the  "  regular  way,"  that  is 
deliverable  or  receivable  on  the  following  day ;  and  where  nothing  is 
said  about  time  by  either  party  to  a  contract,  it  is  understood  to  be 
"  regular."  Stocks  are,  however,  frequently  sold  or  bought  for  "  cash," 
which  means  that  the  contract  is  to  be  performed  on  the  same  day- 
or  with  a  three  days'  option  to  the  buyer  or  to  the  seller.  If  the 
option  is  in  favor  of  the  former  it  is  called  "  Buyer  3,"  but  if  in  favor 
of  the  latter,  it  is  styled  "  Seller  -3,"  the  first  letter  of  the  words  only 
being  commonly  used  to  indicate  these  terms.  A  broker  selling  stocks 
"  S.  3,"  can,  if  he  chooses,  make  a  cash  transaction  of  it  by  delivering 
them  on  the  day  of  sale,  or  he  may  deliver  them  at  any  time  within 
three  days  ;  but  if  he  sells  them  "  B.  3,"  these  conditions  are  reversed. 
VOL.  ii. — 53 


THE   NEW   YORK   STOCK   EXCHANGE.       33 

The  same  rule  applies  to  options  of  ten,  thirty,  and  sixty  days,  but  one 
day's  notice  must  be  given  before  stocks  so  sold  can  be  delivered  or 
demanded.  .While  three  days'  contracts  bear  no  interest,  all  beyond 
that  time  carry  interest  in  favor  of  the  seller  as  long  as  the  contract  runs, 
at  the  rate  of  six  per  cent.  Hence  it  is  that  the  bears — namely,  those 
who  sell "  short "  for  a  decline — have  an  important  element  in  their  favor, 
for  while  they  are  making  interest,  the  bulls — or  holders  for  a  rise — 
have  to  pay  it,  and  it  forms  a  heavy  item  in  the  account  against  them. 
For  a  period  exceeding  sixty  days  no  contracts  are  allowed  to  be  made. 
All  stocks  are  deliverable  at  the  office  of  the  buyer  before  a  quarter- 
past  two  o'clock  on  the  day  they  are  due,  and  payment  for  the 
same  is  made  by  check — certified  if  demanded — at  the  time  of  such 
delivery.  Where  delivery  is  not  made  by  that  time,  the  contract  is 
continued  until  the  following  day,  unless  the  buyer  decides  to  notify 
the  presiding  officer  of  the  Stock  Exchange  to  buy  in  the  stock  for 
the  account  of  the  defaulting  party  "  under  the  rule,"  when  it  is  at 
once  bought  at  the  market  price,  and  the  delinquent  seller  pays  to 
the  buyer  the  difference,  if  any,  between  the  price  he  sold  at  and  the 
price  paid  when  thus  bought.  No  loss  of  credit,  however,  is  involved 
in  this  proceeding,  provided  the  difference  is  promptly  paid,  defaults 
in  deliveries — except  in  cases  of  failure — being  almost  invariably  in 
consequence  of  a  scarcity  on  the  street  of  the  particular  stock  required, 
and  a  consequent  difficulty  in  borrowing  it.  This  is  always  true 
whenever  a  stock  is  "  cornered,"  and  considerable  stock  is  at  such 
times  bought  in  under  this  inexorable  though  very  just  rule. 

There  is  no  limit  to  the  amount  of  stock  any  one  broker  may  buy 
or  sell  in  a  single  day,  whether  or  not  he  is  trading  on  his  own  account, 
and  whether  or  not  he  has  any  capital. to  back  his  operations; 
as  no  broker  who  bids  for,  or  offers  a  stock  can  refuse  to  sell  to, 
or  buy  from,  as  the  case  may  be,  any  member  who  accepts  his  prof- 
fered contract ;  but  either  party  to  a  contract  may  call  at  any  time 
during  the  continuance  of  the  same  for  a  mutual  deposit  of  ten  per 
cent.,  and  whenever  the  market  price  of  the  securities  changes,  so  as 
to  reduce  the  margin  of  the  deposit  either  way  below  five  per  cent., 
either  party  may  call  for  a  deposit  sufficient  to  restore  the  margin  to 
ten  per  cent.,  and  this  may  be  repeated  as  often  as  the  margin  is  so  re- 
duced. If  the  deposits  are  called  for  before  two  P.  M.,  they  must  be  made 
before  three  P.  M.  with  the  trust  company  agreed  upon,  but  if  called  for 
later  in  the  day,  they  are  not  required  to  be  made  until  eleven  A.  M. 
on  the  following  day.  In  the  event  of  either  party  failing  to  comply 
with  the  demand  for  a  deposit,  the  party  calling  may,  after  giving  due 


34  THE      NEW      YORK      STOCK     EXCHANGE. 

notice,  report  the  default  to  an  officer  of  the  Exchange,  and  require 
him  to  re-purchase  or  re-sell  the  security  involved,  and,  after  collecting 
any  difference  that  may  accrue,  pay  it  over  to  the  party  entitled  to  it. 
This  privilege  is  frequently  resorted  to  in  the  case  of  long-time  con- 
tracts, but  seldom  in  "  regular  "  or  three  days'  transactions  unless  a  fail- 
ure to  fulfill  them  is  apprehended,  or  wide  fluctuations  are  anticipated 
in  connection  with  some  speculative  movement ;  but  it  nevertheless, 
imposes  a  salutary  check  upon  those  of  scanty  means,  restraining 
them  from  too  desperate  ventures. 

The  members  of  the  Stock  Exchange  are  not  a  particularly  serious 
body,  but  are  much  given  to  mirth  and  laughter,  jokes — practical  and 
otherwise — general  hilarity,  and  loud  chorus  singing  when  the  market 
happens  to  be  dull.  "  John  Brown's  soul  is  marching  on,"  at  such  times 
alternates  with  "Glory,  Hallelujah!"  and  the  strains  of  "The  Old 
Hundredth  "  have  a  very  serio-comic  effect  within  the  walls  of  the 
modern  temple  of  Mammon.  The  day  before  Christmas  is  always 
given  up  to  amusing  antics,  the  performances  being  chiefly  musical, 
and  the  instruments  toy  drums,  trumpets,  and  fish-horns,  and  busi- 
ness is  correspondingly  neglected  for  the  time  being.  On  a  certain 
previously  announced  day  in  the  autumn,  all  white  hats  appearing 
in  the  board  room  are  unceremoniously  crushed  over  the  wearers' 
eyes,  thrown  high  in  the  air,  or  otherwise  disposed  of,  and  all  with 
perfect  good  humor.  That  the  exuberant  spirits  of  the  average 
young  stockbroker  need  restraining  by  wholesome  moral  discipline  is 
evident,  both  from  the  experience  of  those  who  have  observed  him, 
and  the  by-laws  which  impose  fines  for  indecorous  language  or  conduct, 
interruptions  of  the  presiding  officer,  acts  endangering  the  persons  of 
his  fellow-members,  and  other  little  playful  pranks  to  which  he  is  given 
when  he  has  nothing  better  to  do  ;  but  on  the  whole,  stockbrokers  are 
a  jolly,  good-hearted,  free-and-easy  class  of  men,  who  spend  their 
money  fast  when  they  are  making  it  fast,  and  sometimes  even  when 
they  are  not  doing  so ;  are  fond  of  the  good  things  of  the  world, 
and  prone  very  often  to  indulge  themselves  regardless  of  the  morrow. 
This  light-heartedness  and  joviality  undoubtedly  lessen  the  strain  of 
a  wearing  and  exciting  occupation  upon  the  nervous  system  very 
materially,  and  what  is  sacrificed  in  the  way  of  dignity  is  gained  in 
health ;  for  it  may  be  safely  assumed  that  if  the  Stock  Exchange  were 
a  serious  body  its  members  would  die  under  their  anxieties  far  sooner 
than  they  actually  do.  At  best  they  lead  for  the  most  part  lives  of 
feverish  excitement,  and  the  death  rate  among  them  is  abnormally 


THE      NEW      YORK      STOCK      EXCHANGE.  35 

high,  while  nervous  prostration,  heart  disease,  Bright's  disease,  and 
apoplexy  are  the  maladies  that  most  frequently  assail  them. 

A  more  liberal  class  of  men  than  stockbrokers  it  would  be  hard  to 
find,  and  a  deserving  cause  never  appeals  to  the  Stock  Exchange  in 
vain.  It  is  eminently  charitable,  while  its  donations  are  made  in  that 
broad  catholic  spirit  which  practically  rebukes  a  narrow  sectarianism 
and  teaches  true  philanthropy.  During  the  war  it  showed  its 
patriotism  not  only  by  refusing  to  deal  in  gold,  and  by  sending  many 
of  its  members  to  fight  the  battles  of  the  Union,  but  by  munificent 
contributions  to  the  cause  so  dear  to  the  nation's  heart. 

A  member  once  in  possession  of  his  seat  has  only  his  semi-annual 
dues  of  twenty-five  dollars,  in  addition  to  his  fines  and  the  life  assur- 
ance assessments,  to  pay,  and  his  place  at  the  board  is  worth  far  more 
.than  its  cost ;  a  fact  which  will  doubtless  lead  eventually  to  a  much 
higher  price  for  membership  than  hitherto.  With  a  capital  of  fif- 
teen or  twenty  thousand  dollars,  or  even  as  little  as  ten,  a  broker 
can  do  a  legitimate  commission  business  by  carrying  stocks  for  cus- 
tomers. The  margin  put  up  with  him  by  the  latter  is,  or  ought  to 
be,  equal  to  that  which  he  has  to  allow  in  borrowing  on  the  secu- 
rities he  buys  and  carries  for  their  account ;  so  that  his  own  capital 
remains  intact  to  his  credit  with  the  bank  he  deposits  with,  and  on  the 
strength  of  which  he  can  command  certifications  of  his  own  checks  in 
payment  for  stocks  to  a  moderate  amount — say  treble  that  of  his  cash 
balance.  These  certifications  of  his  checks  by  the  bank  are  made 
with  the  understanding  that  his  account  is  to  be  made  good  by  three 
o'clock  the  same  day,  and  they  enable  him  to  pay  for  stocks  that  he 
would  otherwise  be  unable  to  pay  for.  The  value  of  this  kind  of 
credit  to  the  broker  is  obviously  great,  while  it  is  equally  obvious  that 
the  bank  affording  it  is  entirely  without  security  for  the  time  being 
for  any  amounts  it  may  certify  in  excess  of  the  broker's  balance,  but 
it  is  fair  to  say  that  the  instances  where  brokers  have  failed  to  make 
their  accounts  good  under  such  circumstances,  before  the  close  of 
business  are  very  few.  The  practice  is  nevertheless  a  dangerous  one 
for  the  banks,  and  suggests  the  advisability  of  establishing  a  Stock 
Exchange  clearing-house  like  that  connected  with  the  Gold  Room, 
which  would  dispense  with  the  necessity  for  certifications. 

The  usual  margin  required  by  brokers  for  buying  or  selling  stocks 
on,  is  ten  per  cent.,  or  $1,000  for  each  hundred  shares,  although  occa- 
sionally only  half  the  amount  is  exacted;  but  since  the  panic  of  1873, 
some  conservative  houses  are  indisposed  to  either  buy  or  sell  on  a 
margin  of  less  than  twenty  per  cent.  This  places  them  in  a  very  eas/ 


36  THE      NEW      YORK      STOCK      EXCHANGE. 

position  indeed,  for  they  can  usually  borrow  to  within  ten  per  cent,  of 
their  market  value,  on  the  stocks  they  are  carrying.  In  addition  to 
their  commission,  brokers  are  constantly  making  on  their  interest  ac- 
count; that  is  to  say,  while  they  invariably  charge  their  customers  seven 
per  cent,  interest  on  the  stocks  they  are  carrying  for  them,  they  borrow 
at  the  market  rate — which  is  generally  much  lower — on  these  identical 
stocks,  or  lend  them  out  to  the  bears  "  flat  " — that  is  free  of  interest — 
or  at  two,  three,  or  four  per  cent.,  making  the  difference  between  seven 
per  cent,  and  the  market  rate  themselves.  Again  when  they  sell 
stocks  "  short  "  for  their  customers,  they  make  six  per  cent,  interest, 
but  credit  none  of  it  in  their  accounts.  In  keeping  out  "  short  "  con- 
tracts— not  on  time — brokers  have  occasion  to  borrow  stocks  instead 
of  money,  and  this  they  do  by  paying  the  lenders  the  market  price 
of  the  stock,  and  responding  to  any  calls  they  may  make  previous  to 
their  return  for  more  money  to  offset  any  advance  that  may  have 
taken  place  in  the  borrowed  securities.  Operating  on  the  "  short,"  or 
"  bear  "  side  of  the  market  for  customers,  it  will  thus  be  seen  leaves 
a  broker's  bank  account  stronger  than  if  they  are  on  the  "  bull "  side 
of  the  market,  for  not  only  does  his  own  capital  remain  untouched, 
but  their  margin  also.  The  stock  that  he  borrows  at  the  market 
price  he  delivers  to  those  he  has  sold  to,  and  receives  their  check  in 
return;  and  any  difference  there  may  be  between  the  checks  he  gives 
and  those  he  receives,  merely  represents  so  much  profit  or  loss  to 
his  customers.  If  a  loss,  he  can  require  them  to  make  it  good  by 
keeping  their  margin  up  to  the  percentage  agreed  upon ;  if  a  profit, 
it  goes  to  swell  the  amount  of  margin  in  his  hands,  and  consequently 
the  balance  to  his  credit  at  the  bank. 

The  standard  of  honor  is  high  among  stockbrokers  in  relation  to 
their  contracts  with  each  other,  as  it  necessarily  must  be  when  these 
are  the  work  of  a  moment,  and  a  single  word, -and  involve  large 
amounts  of  money.  Contracts  once  made  are  never  repudiated, 
even  where  ruin  might  be  averted  by  doing  so,  and  where  it 
might  be  difficult  to  prove  them  to  the  satisfaction  of  a  court  of  law. 
Without  this  strict  sense  of  honor  there  would  be  no  safety  in  doing 
business  at  the  stock  board.  Nowhere  else  do  men  stand  by  their 
bargains  so  resolutely,  looking  with  such  philosophical  resignation 
upon  their  losses,  and  taking  their  profits  so  much  as  a  mat.ter  of  course. 
There  are,  it  is  true,  exceptions  to  this  rule,  but  they  are  rare. 

In  the  struggles  of  the  Stock  Exchange,  the  longest  purse  generally 
wins ;  but  the  triumph  is  usually  only  for  a  season,  for  nowhere  else 
do  riches  so  suddenly  take  to  themselves  wings ;  and  the  millionaire 


THE      NEW      YORK      STOCK      EXCHANGE.  37 

of  to-day  may  be  a  hopeless  bankrupt  to-morrow.  The  moral  to  the 
wise,  is  that  it  is  best  to  avoid  Wall  street  as  a  theater  for  speculation 
on  margins.  But  as  a  market  for  securities,  in  which  respect  it  is  now 
as  indispensable  as  the  Produce  Exchange  ;  and  when  one  is  really  pos- 
sessed of  the  stocks  he  sells,  or  can  pay  for  and  take  away  with  him 
those  he  buys,  he  does  as  legitimate  a  business  in  Wall  street  as  is 
done  by  any  merchant  elsewhere.  Few,  however,  are  willing  to  limit 
their  purchases  to  their  actual  capital,  and  in  their  haste  to  be  rich, 
many  are  often  left  poor  indeed. 

The  brokers  who  confine  themselves  strictly  to  a  commission 
business — of  which  there  are  not  many  in  fact,  although  many  profess 
to  do  so — are  the  most  successful  in  the  end,  and  the  only  ones  likely 
to  retain  their  wealth  after  they  have  amassed  it ;  for  stock  brokerage 
is  very  lucrative  where  the  capital  is  large  and  the  orders  abundant, 
and  the  returns  even  upon  a  small  capital — provided  enough  commis- 
sions can  be  obtained,  and  losses  are  avoided — are  usually  far  greater 
than  in  ordinary  trade.  The  risks,  however,  are  also  greater,  and 
fortunes  that  were  made  so  fast  during  the  war,  are  now  of  compara- 
tively slow  growth,  while  the  battle  of  life  on  the  Stock  Exchange  is 
a  severe  one.  At  least,  the  spectator  who  looks  down  from  the 
strangers'  gallery  upon  an  excited  market,  would  be  led  to  think  so. 
He  might  easily  imagine — if  he  knew  not  what  manner  of  men  he 
was  observing — that  the  brokers  congregated  together  were  actively 
engaged  in  tearing  each  other  to  pieces,  howling  meanwhile,  like  the 
demons  in  Dante's  "  Inferno  "  ;  so  great  is  the  swaying  to  and  fro,  and 
surging  up  and  down,  of  the  human  masses,  each  individual  of  which 
is  apparently  shouting  or  screaming  immoderately,  and  darting  his 
arms  through  the  air  as  if  in  menace  to  his  neighbors ;  so  semi-frantic 
are  the  gesticulations  indulged  in,  and  so  great  the  clamor  and  tur- 
bulence of  the  scene.  No  wonder  that  men  break  down  under  such 
a  strain,  and  that  the  secret  history  of  the  Stock  Exchange  is  full  of 
melancholy  tragedies ;  stories  of  squandered  fortunes,  and  ruined 
health  ;  of  desolated  homes,  and  early  graves — and  all  through  pursuit 
of  the  gambler's  prize  of  gain,  as  if  money  were  the  summum  bonum 
of  existence,  the  Ultima  Thule  of  human  effort. 

That  the  New  York  Stock  Exchange  exerts  a  mighty  influence 
over  the  price  of  the  vast  volume  of  securities  dealt  in  within  its  walls, 
and  indirectly,  through  sympathy,  over  all  the  securities  in  the  United 
States,  must  be  obvious  to  the  most  casual  observer  of  the  fluctuations 
recorded  in  the  daily  stock  lists.  That  it  is  a  barometer  indicating 
every  change  calculated  to  raise  or  depress  values  is  equally  apparent, 


38  THE      NEW      YORK      STOCK      EXCHANGE. 

although  speculative  influences  may  sometimes  temporarily  prevent 
the  market  from  responding  to  legitimate  influences.  That  it  reflects 
the  inactivity  and  depression  of  trade,  and  the  consequently  dimin- 
ished earnings  of  railways,  and  the  impaired  value  of  other  properties 
represented  by  stocks,  in  the  reduced  prices  of  those  stocks,  is  as  true 
as  that  when  the  general  prosperity  of  the  country  revives,  it  will 
indicate  the  change  by  a  corresponding  improvement  of  prices.  If 
war  should  be  threatened,  or  if  any  great  national  calamity  were  to 
occur  at  any  time,  such  as  the  destruction  of  crops,  or  the  burning,  as 
in  the  case  of  Chicago  or  Boston,  of  a  large  city,  its  responsive  pulse 
would  not  fail  to  show  it  almost  as  quickly,  and  perhaps  much  more 
decidedly,  than  the  indicator  in  the  Gold  Room  ;  and  so  long  as  men 
continue  sensitive  to  whatever  touches  their  pockets,  so  long  will  the 
Stock  Exchange  be  equally  sensitive  to  every  thing  that  affects  stock 
values  directly  or  indirectly,  and  to  all  the  mutations  of  public  senti- 
ment and  opinion  in  relation  thereto — a  mirror  of  the  times. 


THE  NEW  YORK  CLEARING  HOUSE. 

CONSIDERING  the  important  part  the  New  York  Clearing 
^-^  House  plays  in  the  economy  of  the  banks  belonging  to  it,  sin- 
gularly little  is  known  of  it  and  its  methods,  even  by  the  business 
community  most  intimately  concerned  with  it,  while  to  the  masses 
it  is  almost  as  great  a  riddle  as  the  Sphinx.  The  purpose  of  this 
article  is  to  shed  a  gleam  of  light  on  the  subject,  preliminary  to 
which,  however,  we  may  remark,  in  view  of  the  fact  that  New  York 
is  the  real  and  acknowledged  financial  center  of  the  United  States, 
it  is  somewhat  surprising  there  is  not  more  consolidated  financial 
power  here  than  we  actually  find  to  exist. 

The  New  York  banks  are  only  nominally  united  through  the 
Clearing  House,  for  the  purpose  of  making  their  daily  exchanges  and 
settlements,  and  enforcing  sufficient  discipline,  in  matters  affecting 
credit  and  solvency,  to  protect  themselves  in  their  dealings  with  each 
other.  Apart  from  this,  there  is  practically  no  unity  among  them, 
except  on  special  occasions  when  they  combine  for  self-protection 
and  mutual  assistance,  as  they  did  at  the  time  of  the  crisis  of  1873 
or  to  expel  a  member  of  their  Association  for  cause,  as  in  the  case  of 
the  Bank  of  the  State  of  New  York,  in  March,  1876,  or  in  appoint- 
ing a  committee  to  advocate  or  remonstrate  against  some  par- 
ticular measure  pending  in  Congress  or  the  State  legislature,  affect- 
ing banking  interests,  but  the  latter,  of  course,  very  rarely.  It  seems, 
nevertheless,  perfectly  feasible  for  them  to  agree  upon  and  observe 
such  a  unity  of  action  as  would  virtually  make  the  Clearing  House  a 
power  equal  to  the  combined  strength  of  the  banks  belonging  to  it, 
and  give  it  a  sway  somewhat  similar  to  that  exerted  by  the  Bank  of 
England  over  the  money  market. 

The  members  of  the  Clearing  House  should,  to  accomplish  this 
end,  meet  weekly,  like  the  governors  of  "  the  Old  Lady  of  Thread- 
needle  street,"  and  fix  a  minimum  rate  of  discount  for  commercial 
paper,  as  well  as  one  for  call  loans,  to  be  strictly  adhered  to  by  all 
belonging  to  the  Association,  till  raised  or  lowered  by  a  majority 
vote  at  a  subsequent  meeting.  This  action  would  largely  influence 


40  T  H  E      NEW      YORK      CLEARING      HOUSE. 

the  domestic  exchanges,  and  crystallize  the  monetary  power  of  New 
York,  giving  it  a  more  decided  control  of  the  monetary  affairs  of  the 
country  than  it  now  possesses,  owing  to  its  banking  system  being 
without,  what  the  Fenians  might  have  called,  a  head  center.  Every 
bank  is  an  isolated  fragment  of  what  joined  together  would  become 
"  one  stupendous  whole  "  in  the  absence  of  a  United  States  Bank, 
which,  as  experience  has  proved,  it  is  not  desirable  to  create.  But 
doubts  as  to  the  feasibility  of  such  a  consolidation  of  the  power  of 
the  New  York  banking  interest  may  reasonably  be  entertained,  aris- 
ing from  prejudice  and  distrust,  and  the  stumbling  block  of  the 
usury  law,  which  prohibits  a  higher  rate  of  interest  than  seven  per 
cent,  per  annum.  The  former  should  be  swept  away,  however,  as 
cobwebs  of  old  fogyism,  and  the  latter  repealed,  as  all  usury,laws 
ought  to  have  been  long  ago,  for  their  continued  existence  is  in- 
consistent with  our  national  progress  and  enlightenment  in  other 
respects.  , 

Some  may  object  to  the  presence  of  a  financial  power  here 
approaching  in  character  to  that  of  the  Bank  of  England  in  regulat- 
ing the  market  value  of  money,  or,  in  other  words,  the  rate  of  interest, 
but  these,  perhaps,  fail  to  perceive  that  the  strength  which  would 
spring  from  unity  would  be  for  the  public  weal,  and  not  merely  the 
aggrandizement  of  the  banks.  Their  combined  action  in  defense  and 
promotion  of  their  own  interests  would  equally  serve  to  protect  the 
banking  and  commercial  community  at  large,  by  giving  warning  of 
approaching  monetary  stringency,  and  inspiring  greater  confidence  in 
the  banks  individually  and  collectively  in  times  of  panic.  We  saw 
the  powerful  moral  effect  of  the  before-mentioned  course  of  the  banks 
in  1873,  and  a  more  forcible  financial  illustration  of  the  strength 
which  unity  gives  was  never  afforded  than  in  that  particular  instance. 
As  soon  as  the  public  knew  that  all  the  Clearing  House  banks  had 
resolved  to  act  as  one,  the  fears  for  their  safety,  which  had  previously 
prevailed,  subsided.  They  helped  themselves  by  assisting  their 
neighbors. 

It  would  be  erroneous  to  suppose  that  a  higher  average  rate  of 
interest  or  discount  would  prevail  in  consequence  of  the  suggested 
action  of  the  banks  through  the  Clearing  House  than  under  the 
present  system,  for  the  banks  would,  at  all  times,  have  to  compete 
with  private  lenders — that  is,  the  Wall  street  or  open  money  market — 
just  as  the  Bank  of  England  has  to  compete  with  Lombard  street, 
and  there  is  a  great  deal  of  private  capital  available  for  loans,  in  New 
York  as  well  as  in  London.  The  Clearing  House  would  have  to 


THE      NEW      YORK      CLEARING      HOUSE.  41 

lower  its  rates  whenever  outside  rates  were  materially  below  it,  and 
continued  so  for  a  sufficient  length  of  time,  or  borrowers  would 
obtain  loans  and  discounts  in  the  open  market :  this  alone  would  be 
a  sufficient  check  upon  excessive  bank  rates.  The  Clearing  House 
would  both  regulate  the  price  of  money  and  be  regulated  by  it,  and 
the  extortion  hitherto  practiced  by  private  lenders  in  making  call 
loans  in  periods  of  stringency  would  be  much  less  likely  to  occur  in 
the  face  of  an  established  Clearing  House  rate  than  under  a  system 
which  permits  each  bank  to  ask  whatever  rate  it  chooses  and  to  take 
the  most  it  can  get.  The  country  needs  a  central  monetary  power 
to  serve  as  a  barometer  of  the  times,  and  sooner  or  later  it  will 
probably  be  an  accomplished  fact. 

There  are  at  present  seventy-eight  banks  in  the  city  of  New  York 
—forty-eight  of  which  are  National,  with  a  capital  of  $68,500,000 — 
but  only  fifty-nine  of  these  are  members  of  the  Clearing  House,  their 
aggregate  capital  being  about  eighty  millions.  The  remainder  clear, 
or  rather  make  their  exchanges,  through  some  of  the  others,  by  special 
arrangement.  Without  this  facility  for  so  doing  they  would  find  it 
practically  impossible  to  do  business,  as  their  only  alternative  would 
be  to  present  all  the  checks  they  received  on  other  banks  at  their 
individual  counters  by  the  hands  of  messengers.  A  bank  requiring 
this  service  performed  for  it  opens  an  account  like  an  individual 
depositor,  with  one  willing  to  do  the  business,  and  undertakes  to 
leave  constantly  on  deposit  with  it,  as  security  for  the  risk  assumed, 
whatever  amount  may  be  agreed  upon  between  them.  The  use  of 
this  credit  balance  is  the  only  compensation  the  latter  receives  and 
it  is  usually  little  enough,  for  in  so  acting  it  takes  upon  itself  the 
responsibility  of  paying  all  checks  drawn  upon  the  outside  bank,  the 
liability  of  a  bank  doing  business  for  another  being  the  same  as  for 
its  own  transactions,  and  it  must  give  one  day's  notice  to  the  Clear- 
ing House  before  it  can  discontinue  exchanging  for  it.  Nevertheless 
solvent  banks  not  belonging  to  the  Association  have  no  difficulty  in 
getting  some  of  those  who  are  members  of  it  to  act  for  them. 

All  the  large  banks  are  included  in  the  organization,  and  only 
small  institutions  are  excluded  from  it,  but  before  a  bank  is  admitted 
to  membership  it  has  to  undergo  an  examination  as  to  its  capital  and 
condition,  while  its  general  standing  and  the  reputation  of  its 
managers  are  not  lost  sight  of.  There  are,  however,  no  fixed  limits 
imposed  as  to  capital  or  condition  on  entering  the  Association. 
For  a  large  bank  to  be  thrown  out  of  the  Clearing  House— as  in  the 
case  of  the  Bank  of  the  State  of  New  York,  referred  to — is  equivalent 


42  THE      NEW      YORK, CLEARING      HOUSE. 

to  forcing  its  suspension,  as  the  discredit  attending  it  would,  if  the 
institution  concerned  failed  thereupon  to  close  its  doors,  inevitably 
cause  such  a  run  upon  it  as  would  soon  drain  it  of  its  deposits  ;  but 
as  a  matter  of  fact,  expulsion  is  never  resorted  to  unless  there  are 
conclusive  reasons  why  a  bank  should  be  discredited. 

The  banks  of  the  city,  with  the  exception  of  a  few  small  institu- 
tions, which  clear  through  larger  ones,  are  thus  seen  to  be  united  for 
a  common  purpose  as  members  of  an  organization  whose  full  title  is 
"  The  New  York  Clearing  House  Association,"  the  objects  of  which 
are  defined  to  be  the  effecting  at  one  place,  i.  e.t  the  Clearing  House,— 
formerly  in  the  Bank  of  New  York  building  in  Wall  street,  and  now 
at  the  corner  of  Nassau  and  Pine  streets — of  the  daily  exchanges  be- 
tween the  associated  banks,  and  the  payment  of  the  resulting  balances. 
It  will  conduce  to  the  better  understanding  of  the  subsequent  de- 
scriptions if  the  reader  is  made  acquainted  with  the  rules  and  regula- 
tions governing  this  body,  and  therefore  we  shall  proceed  to  briefly 
summarize  and  explain  the  most  important  of  them. 

In  the  first  place  the  Association  is  in  no  way  responsible  for  the 
exchanges,  or  the  balances,  except  so  far  as  the  latter  are  actually 
paid  into  the  hands  of  the  manager.  Its  responsibility  is  strictly 
limited  to  the  faithful  distribution  among  the  creditor  banks  of  the 
sums  actually  received  by  him,  and  in  the  event  of  any  loss  occur- 
ring while  the  balances  are  in  his  custody,  the  constitution  provides 
that  it  be  borne  and  paid  by  the  banks  in  the  same  proportion  as  the 
other  expenses  of  the  Clearing  House. 

At  every  annual  meeting  a  standing  Clearing  House  Committee 
of  five  is  chosen  to  supervise  and  direct  the  affairs  of  the  Association 
generally,  including  its  finances,  but  the  manager,  under  control  of 
this  committee,  has  immediate  charge  of  all  business  at  the  Clearing 
House  so  far  as  relates  to  the  manner  of  its  transaction. 

The  hour  for  making  exchanges  at  the  Clearing  House  is  precisely 
ten  o'clock  in  the  morning.  Between  half  past  twelve  and  half  past 
one,  the  debtor  banks  pay  to  the  manager  the  balances  against  them 
in  actual  coin,  United  States  legal  tender  notes,  or  United  States 
Treasury  certificates  of  deposit.  At  half  past  one,  or  as  soon  after- 
ward as  the  amounts  can  be  made  up  and  proved,  the  creditor  banks 
receive  from  the  manager  the  balances  due  to  each  of  them,  provided 
all  the  balances  due  from  the  debtor  banks  have  been  paid.  Should 
any  one  of  the  associated  banks  fail  at  the  proper  hour  to  pay  the 
balance  against  it,  the  amount  would  have  to  be  immediately  fur- 
nisKed  to  the  Clearing  House,  by  the  several  banks  exchanging  with 


THE      NEW      YORK      CLEARING      HOUSE.  43 

the  defaulting  bank,  in  proportion, to  their  respective  balances  against 
it,  resulting  from  the  exchanges  of  the  day,  and  the  manager  in  such 
a  case  is  required  to  make  requisitions  accordingly,  to  avoid  delay  in 
the  general  settlement.  The  amounts  so  furnished  the  Clearing 
House  on  account  of  the  defaulting  bank  would,  of  course,  consti- 
tute claims  on  the  part  of  the  responding  banks  against  it,  and  it 
would  cease  to  be  a  member  of  the  Association.  Errors  in  the 
exchanges,  and  claims  arising  from  the  return  of  checks,  or  deficien- 
cies in  specie  or  legal  tenders  received  at  the  Clearing  House,  or  from 
any  other  cause,  are  adjusted  directly  between  the  banks  that  are 
parties  to  them,  and  not  through  the  Clearing  House,  which  is  in  no 
way  responsible  for  irregularities  or  mistakes  of  this  kind. 

All  checks,  drafts,  notes,  or  other  items  in  the  exchanges  returned 
as  "  not  good,"  or.  "mis-sent,"  have  to  be  returned  the  same  day 
directly  to  the  bank  from  which  they  were  received,  and  the  latter 
must  immediately  refund  to  the  bank  returning  the  same  the 
amount  which  it  had  received  through  the  Clearing  House  for  such 
items. 

Every  bank  belonging  to  the  Association  is  required  to  furnish 
a  weekly  statement  of  its  condition  to  the  manager  for  publication, 
showing  the  average  amount  of  its  loans  and  discounts,  specie,  legal- 
tender  notes,  circulation,  and  deposits,  and  the  aggregate  of  these 
returns  form  the  bank  statement  published  every  Saturday.  The 
banks  from  time  to  time  may  appoint  one  of  their  own  number,  or 
the  Assistant  Treasurer  of  the  United  States  at  New  York,  to  be  a 
depository  to  receive,  in  special  trust,  such  coin,  or  legal-tender 
notes  as  any  of  the  associated  banks  may  choose  to  send  to  it  for 
safe-keeping ;  and  the  depository  issues  certificates  in  exchange  for 
convenient  amounts.  The  certificates  payable  on  demand  in  legal- 
tenders — bearing  no  interest— are  negotiable  only  among  the  banks, 
under  a  penalty  of  a  hundred  dollars  fine  ;  and  are  received  by  them 
in  payment  of  balances  at  the  Clearing  House.  Their  use  is  entirely 
voluntary,  and  due  to  the  greater  safety  and  convenience  of  handling 
large  amounts  of  them  than  their  equivalent  in  money. 

Originally  the  Bank  of  America  was  the  chosen  depository,  but 
since  the  early  part  of  the  greenback  epoch  the  banks  have  chosen 
the  United  States  Sub-Treasury  as  such  for  both  gold  and  currency ; 
and  there  were — according  to  the  official  statement  of  the  national 
debt — on  the  1st  of  January,  1876,  more  than  thirty-five  millions  of 
currency  "  certificates  of  deposit  "  outstanding.  The  Treasury  gold 
certificates  used  for  the  payment  of  gold  balances  by  the  banks  are, 


44  THE      NEW      YORK      CLEARING      HOUSE. 

nowever,  precisely  the  same  as  those  issued  to  the  public  generally, 
payable  to  the  bearer  on  demand. 

New  members  have  to  pay  an  admission  fee  according  to  their 
respective  capitals,  ranging  from  $1,000  for  banks  whose  capital  does 
not  exceed  half  a  million,  to  $7,500  for  banks  whose  capital  exceeds 
five  millions,  and  any  bank  increasing  its  capital  has  to  pay  a  propor- 
tionate sum.  A  standing  committee  of  five  is  chosen  at  every  annual 
meeting,  which,  acting  in  concurrence  with  the  Clearing  House 
Committee,  has  power  in  cases  of  extreme  emergency,  where  a 
majority  of  both  committees  is  present,  by  a  unanimous  vote,  to 
suspend  any  bank  from  the  privileges  of  the  Clearing  House  until 
the  pleasure  of  the  Association  is  ascertained,  upon  which  a  general 
meeting  must  be  called  forthwith  to  consider  the  action. 

Any  member  of  the  Association  may  withdraw  at  will  after  pay- 
ing its  due  proportion  of  all  expenses  incurred,  and  signifying  its 
intention  so  to  do  to  the  Clearing  House  Committee.  The  ex- 
penses of  the  Clearing  House — not  including  the  expense  of  printing 
for  the  several  banks,  which  last  is  apportioned  equally — are  borne 
and  paid  ^ro  rota  (after  the  payment  of  two  hundred  dollars  by  each) 
by  the  banks  belonging  to  it,  according  to  their  respective  capitals, 
ranging  from  $100  for  those  whose  capital  is  under  half  a  million,  to 
$750  for  those  whose  capital  exce-eds  five  millions,  and  in  the  same 
proportion  if  more  funds  become  necessary. 

Whenever  legal  tender  notes  are  known  to  have  been  withdrawn 
from  use  through  the  agency  of  any  bank  belonging  to  the  Associa- 
tion, the  Clearing  House  Committee  is  required  to  make  an  imme- 
diate examination  of  such  bank,  and,  should  there  appear  to  be  com- 
plicity on  the  part  of  it  or  its  officials  in  any  locking-up  movement, 
to  suspend  it  from  the  Clearing  House  until  action  by  the  Associa- 
tion is  taken  thereon.  This  rule  was  adopted  in  consequence  of  the 
part  certain  banks  were  at  one  time  supposed  to  have  taken  in  the 
outrageous  proceeding  of  locking  up  money,  in  collusion  with  un- 
scrupulous speculators  aiming  to  depress  prices  on  the  stock  ex- 
change. 

Gold  checks  are  cleared  in  a  separate  department  of  the  Clearing 
House,  and  the  exchanges  there  are  made  at  ten  o'clock  A.  M.  also. 
The  debtor  banks  pay  to  the  manager,  before  half  past  twelve,  the 
balances  against  them,  either  in  coin  or  treasury  gold  certificates, 
arid  at  that  hour,  or  as  soon  afterwards  as  the  amounts  can  be 
made  up,  the  creditor  banks  receive  from  him  the  balances  due 
them  in  the  same  manner  and  on  the  same  conditions  as  in  the 


THE      NEW      YORK      CLEARING      HOUSE.  45 

regular  clearings  of  the  banks,  the  expenses  being  likewise  divided 
pro  rata. 

There  have  been  only  two  managers  of  the  Clearing  House  since 
its  establishment  in  1853,  namely,  Mr.  G.  D.  Lyman,  and  the  present 
incumbent,  Mr.  W.  A.  Camp,  and  the  advantages  of  the  new  system 
of  making  the  exchanges  over  the  old  practice  of  the  banks — which 
was  to  draw  settlement-checks  on  each  other  for  even  thousands 
near  the  balance  due,  the  account  between  them  thus  always  show- 
ing a  small  balance  still  unsettled — have  been  thus  stated  : — "  the 
condensation  for  each  bank  of  its  very  many  balances  into  one,  and 
the  settlement  of  that  balance  without  a  movement  of  actual  coin  or 
legal-tender  notes,  unless  for  sums  below  any  of  the  denominations 
of  gold  certificates,  or  certificates  of  deposit,  to  make  change  ;  the 
saving  of  clerical  labor  by  the  avoidance  of  numerous  accounts, 
entries,  and  postings  ;  the  great  saving  of  time  to  the  settling  clerks 
and  porters  of  the  banks,  and  the  vast  diminution  of  risk  in  making 
exchanges  and  settlements  from  bank  to  bank ;  relief  from  the  labor 
and  annoyance  to  which  the  cashiers,  tellers,  and  book-keepers  of  the 
banks  were  subjected  under  the  old  system  ;  the  liberation  of  the 
banks  from  all  injurious  and  complicating  dependence  on  each  other, 
as  well  as  the  facilities  afforded  by  the  Clearing  House  books  for 
knowing,  at  all  times,  the  management  and  standing  of  every  institu- 
tion belonging  to  the  Association." 

Some  opposition  was  nevertheless  originally  manifested  to  the 
establishment  of  the  Clearing  House,  notwithstanding  the  defects 
of  the  system  it  superseded,  on  the  assumption  that  it  was  not 
needed  and  might  favor  a  dangerous  concentration  of  power  in  the 
hands  of  a  few  managers  who  might  use  it  for  inquisitorial  purposes, 
and  the  exercise  of  an  arbitrary  supervision.  Hence  for  nearly  a 
year  after  its  practical  adoption  it  remained  without  a  constitution, 
and  its  members  are  still  averse  to  using  it  for  any  other  purposes 
than  those  it  was  organized  to  serve. 

Under  the  old  system  of  making  the  exchanges,  one  half  of  the 
ba  :ks  simultaneously  sent  porters  to  the  other  half  to  pay  or  receive 
balances,  each  carrying  a  book  of  entry.  The  paying  teller  of  each 
receiving  bank  entered  the  exchange  on  the  credit  side  of  the  book, 
after  which  he  entered  on  the  debit  side  the  return  exchange,  and 
immediately  the  porter  hurried  away  to  pay  and  receive  in  like  man- 
ner at  the  other  banks.  Thus  the  porters  crossing  each  other's 
course,  often  met  in  groups  at  a  single  bank,  and  were  delayed  by 
having  to  wait. their  turn,  so  that  it  took  an  hour  or  two  to  make  the 


46  THE      NEW      YORK      CLEARING      HOUSE. 

circuit,  and  the  exchanges  were  not  completed  generally  until  after- 
noon.  The  banks  made  no  attempt  at  a  daily  settlement  of  accounts 
between  themselves  owing  to  the  time  it  would  have  consumed,  but 
they  informally  agreed  upon  a  weekly  adjustment  of  balances  after 
the  exchange  of  Friday  morning.  The  cashier  of  each  bank  then 
drew  checks  for  all  the  balances  due  it  by  other  banks  and  sent  out 
porters  to  collect  them,  and  these  porters,  after  the  collections  were 
made,  met  to  adjust  differences,  which  were  usually  many,  and  bring 
order  out  of  chaos. 

An  old  bank  officer — Mr.  I.  S.  Gibbons — in  describing  the  incon- 
veniences and  defects  of  the  system,  says  that  the  light  infantry  banks 
— those  of  small  capital  and  speculative  tendencies — used  to  make  a 
practice  of  profiting  by  this  weekly  settlement,  by  borrowing  money 
on  Thursday,  which  while  restoring  their  accounts  for  Friday,  made 
them  debtors  again  after  its  return  on  Saturday.  Thus  their  debts 
to  other  institutions — the  result  of  their  own  ingenuity — enabled 
them  to  loan  or  discount  to  a  larger  amount  than  their  legitimate  re- 
sources would  have  permitted,  for  it  followed  that  if  each  succeeded  in 
obtaining  an  average  credit  of  three  thousand  dollars,  with  say  thirty 
banks,  it  would  have  ninety  thousand  dollars  added  to  its  supply  of 
loanable  funds.  Virtually,  therefore,  the  weekly  settlements  were 
only  such  in  name,  and  that  there  was  no  attempt  at  economy  of 
time  or  labor  in  making  them,  was  evident  from  the  fact  of  each 
cashier — when  the  paying  teller  or  his  assistant  had  completed  his 
exchange  balance  list — drawing  checks  for  every  balance  due  him 
by  the  other  banks,  whereas,  a  draft  on  one  in  favor  of  another,  would 
have  settled  two  accounts  at  once.  The  porters  of  all  the  banks  were 
simultaneously  let  loose,  like  a  pack  of  hounds  in  pursuit  of  the  same 
game,  and  they  succeeded  in  nothing  more  than  in  getting  in  each 
other's  way,  while  depositing  specie  at  some  banks,  and  drawing  it  at 
others,  and  falling  into  unavoidable  blunders  and  disputes,  tending 
to  much  confusion,  as  they  went  their  rounds. 

The  wrangling  at  the  so-called  porter's  exchange,  in  front  of  one 
of  the  Wall  street  banks,  after  the  draft  drawing  was  finished,  fur 
nished  an  amusing  commentary  on  the  whole  system,  for  in  their 
efforts  to  account  to  each  other  for  what  had  been  done  during  the 
day,  matters  often  became  almost  inextricably  "  mixed."  Perhaps 
Jones  said  that  he  had  left  a  bag  of  specie  at  Smith's  bank,  that  was 
due  from  Robinson's  bank  to  Brown's,  but  Brown's  bank  had  to 
deliver  a  far  larger  amount  to  Smith's.  Where  had  that  gone  ?  No 
one  at  the  moment  could  answer  the  question,  but  it  transpired  that 


THE      NEW      YORK      CLEARING      HOUSE.  47 

Williams  was  owing  a  balance  to  Brown,  and  Robinson  was  similarly 
indebted  to  Williams,  while  White  had  paid  Brown  by  a  draft  from 
Black,  which  Black  had  received  from  Muggins,  on  account  of  Wil- 
liams, but  this  only  satisfied  a  portion  of  the  debit  balance,  and  the 
difficulty  in  the  way  of  adjustments  was  not  overcome  by  the 
reminder  that  a  third  of  the  remainder  was  off-set  by  a  bag  of  gold 
which  Edwards  had  given  to  Wilson,  and  that  he,  in  turn,  had  deliv- 
ered to  Green.  It  would  have  puzzled  a  Philadelphia  lawyer,  or  any 
other,  to  unravel  such  a  tangled  skein  as  this,  but — mirabile  dictu — 
these  porters  solved  the  riddles  one  by  one  as  they  presented  them- 
selves, and  eventually  made  a  settlement  and  dispersed  to  their 
respective  banks. 

One  of  the  vexatious  features  of  the  system  was  that  a  draft,  how- 
ever small,  by  one  bank  on  another,  led  to  a  general  drawing,  and 
although,  if  time  permitted,  the  debtor  banks  would  have  to  pay  the 
balances  against  them,  it  frequently  happened  that  three  o'clock  came 
and  the  banks  closed  before  the  payments  were  all  made,  and  conse- 
quently the  banks  where  the  demands  rested  had  to  respond  to  them, 
and  it  was  not  uncommon  for  a  debtor  bank  to  largely  increase  its 
specie  before  the  close,  with  its  debt  to  the  other  banks,  perhaps, 
doubled,  nor  for  a  creditor  bank  to  find  itself  a  heavy  loser  of  coin, 
institutions  with,  say,  half  a  million  credited  to  them  in  the  general 
account  being  sometimes  depleted  in  this  way  of  nearly  a  quarter  of 
a  million  of  specie.  It  is  not  surprising  that  the  weak  and  speculative 
banks,which  made  a  practice  of  profiting  by  the  defects  of  the  system 
to  enforce  credit  balances,  were  opposed  to  any  improvement  in  it, 
fearing  the  restraining  results  of  change,  while  the  stronger  ones  had 
prejudices  to  lay  aside  and  grievances  to  forget.  But  the  success  of 
the  new  system  was  not  long  in  overcoming  all  objections.  Even  the 
banks  that  had  benefited  most  by  their  own  cunning  in  e^ngineer- 
ing  credit  balances  began  to  think  that  honesty  was  the  best  policy,  if 
no  higher  motive  inspired  it,  and  to  consider  fair  play  a  jewel,  and 
that  theftew  order  of  things  was  better  for  all  than  the  old  one.  Inno- 
vations upon  established  customs  are,  however,  always  regarded  with 
suspicion  and  distrust,  and,  therefore,  adopted  slowly  and  with  hesita- 
tion ;  but,  their  success  once  assured,  men  look  back  with  something 
like  wonder  upon  their  own  previous  failure  to  comprehend  what  was 
so  obvious,  and  to  put  faith  in  what  most  merited  it. 

In  no  one  respect  is  the  new  manner  of  clearing  more  an  improve- 
ment upon  the  old  than  in  the  issue  of  the  Clearing  House  and  gold 
certificates.  Under  the  latter,  if  the  amount  required  in  the  settle- 


48  THE      NEW      YORK      CLEARING      HOUSE. 

ment  of  the  exchanges  was  a  million  and  a  half  of  dollars,  it  would 
have  required  the  movement  of  three  tons  of  gold  coin,  involving, 
of  course,  considerable  expense  as  well  as  risk,  whereas  now  this,  or 
/the  necessity  for  handling  greenbacks,  is  entirely  obviated  by  the  use 
of  these  vouchers,  each  of  the  former  of  which  certifies  that  some 
one  of  the  Clearing  House  banks  has  deposited  in  the  sub-treasury 
a  certain  sum  in  legal  tender  notes — not  less  than  $5,000 — subject  to 
return  on  demand. 

If  the  weak  banks  had,  at  first,  occasion  to  dread  the  establish- 
ment of  the  Clearing  House,  the  sound  ones  had  reason  to  welcome 
it  because  of  the  protection  and  information  it  furnished  of  the  con- 
dition of  all  alike.  The  totals  of  the  general  proof  being  daily  trans- 
ferred to  the  ledger,  reference  to  this  is  alone  necessary  to  ascertain 
the  dealings  of  each  individual  bank,  day  by  day  and  year  by  year, 
since  it  became  a  member  of  the  Association,  and  while  the  extent 
of  its  business  is  thus  exhibited,  a  fair  inference  as  to  its  character 
may  also  be  drawn.  This  affords  a  constant  check  upon  irregularities 
and  brings  all  the  banks  equally  under  the  scrutinizing  eye  of  the 
Clearing  House.  It  is  a  source  of  terror  to  evil  doers,  but  a  panoply 
of  strength  to  those  that  have  nothing  to  fear,  and  all  are  too  keenly 
sensible  of  the  fatal  character  of  expulsion  from  the  body  to  jeopardize 
their  own  credit  and  safety  where  it.  can  possibly  be  avoided.  This 
feature  has  done  much  to  prevent  the  undue  extension  of  loans  which 
prevailed  prior  to  the  organization  of  the  House  when  weak  banks 
borrowed  from  day  to  day,  or  bought  specie,  so  as  to  make  their 
average  reserve  of  coin  appear  greater  than  it  really  was. 

These  forced  averages  became  impossible  under  the  new  regime, 
for  the  average  of  each  bank  had  to  be  determined  from  resources 
within  the  bank,  and  not  a  dollar  could  be  borrowed  or  bought  with- 
out exposure.  The  importance  of  this  as  an  element  of  good  bank- 
ing will  be  recognized  when  it  is  remembered  that  the  loans  rest  on 
the  legal-tender  (or,  under  specie  payments,  the  coin)  average  reserve, 
this  in  turn  resting  on  the  deposits,  and  the  latter  being  dependent 
on  the  resources  of  trade.  Since  the  organization  of  National  banks 
the  checks  imposed  by  the  Clearing  House  have  been  less  needed, 
so  far  as  they  are  concerned,  the  provisions  of  the  National  Currency 
Act  of  themselves  imposing  restrictions  of  a  sufficiently  stringent 
character  to  insure  safety  in  several  essential  particulars. 

Prior  to  the  establishment  of  the  Clearing  House  the  quarterly 
statements  of  the  banks  were  never  trustworthy,  for  as  the  dates  for 
making  these  were  fixed  by  law,  it  was  easy  to  prepare  for  and  "  cook  " 


THE     NEWYORK      CLEARING      HOUSE.  49 

them  to  an  extent  which  rendered  them  only  a  delusion  and  a  snare, 
where  it  was  to  the  interest  of  those  concerned  to  falsify,  but  of 
course  strong  and  honestly  managed  institutions  had  no  inducement 
to  resort  to  such  chicanery.  The  custom  was  for  banks  with  their 
loans  unduly  extended,  to  borrow  deposits  for  a  single  day  in  any  way 
they  could,  and  to  reduce  loans  to  directors  for  a  few  hours,  or  bridge 
over  by  transit  checks  through  other  institutions.  Nor  did  a  subse- 
quent modification  of  the  law  requiring  the  Bank  Superintendent  to 
name  antecedent  dates  for  these  statements,  prevent  them  from 
availing  themselves  of  discreditable  expedients  to  make  themselves 
appear  stronger  than  they  were.  By  the  positive  liquidation  the 
Clearing  House  enforced,  it  set  a  good  example  to  the  rest  of  the 
business  community,  and  imposed  a  salutary  restraining  influence 
upon  speculative  trade  and  commerce. 

Before  and  during  the  war  the  banks  used  the  Clearing  House  as 
a  vehicle  for  redeeming  their  own  circulating  notes,  as  well  as  those 
of  country  banks  redeemable  by  them.  Thus  each  bank  included  the 
notes  of  every  other  bank,  and  those  of  the  institutions  for  which 
each  one  of  them  redeemed,  in  its  exchanges  with  it,  the  same  as 
checks.  Following  the  issue  of  National  Bank  notes,  and  after  the 
withdrawal  of  the  State  Bank  circulation  under  the  prohibitory  taxa- 
tion imposed  upon  it,  the  Clearing  House  was  used  in  the  same  way, 
only  to  a  less  extent,  for  the  redemption  of  the  notes  of  country 
National  banks  having  redeeming  agents  among  its  members,  but  the 
trouble  of  assorting  them  gave  general  dissatisfaction.  The  Park 
"Sank  then  undertook  for  a  consideration  of  about  five  thousand  dollars 
a  year,  to  assort  the  country  bank  notes  of  all  the  other  banks  in  the 
city,  and  this  arrangement  was  prolonged  for  nearly  two  years,  the 
plan  of  working  meanwhile  gradually  improving  in  efficiency,  when 
it  was  interrupted,  and  superseded  by  the  establishment  of  the 
Redemption  Bureau  in  the  office  of  the  United  States  Treasurer  at 
Washington,  for  the  purpose  of  redeeming  the  notes  of  all  National 
banks. 

The  tendency  of  country  bank  notes  is  always,  in  dull  seasons,  to 
accumulate  at  the  financial  centers,  and  especially  New  York,  and 
although  all  National  bank  notes  ar>e  both  guaranteed  by  the  Govern- 
ment and  fully  protected  by  United  States  bonds,  which  makes  them 
equally  good  wherever  and  by  whomsoever  issued,  the  fact  of  their 
not  being  legal-tenders,  but  redeemable  in  such,  makes  the  city  banks 
at  such  times,  desirous  to  exchange  them  for  the  latter  at  frequent 
intervals — as  thjey  can  not  be  counted  in  their  reserves.  An  easy 


50  THE      NEW      YORK      CLEARING      HOUSE. 

means  of  so  doing  was  furnished  by  the  Bureau  referred  to,  and  there- 
fore the  Clearing  House  ceased  to  be  used  for  the  redemption  of 
circulation,  and  the  exchanges  became  limited  to  checks  and  drafts. 
There  is  nothing,  however,  to  prevent  any  bank  belonging  to  the 
Association  from  including  notes  issued  by  any  other  bank  belonging 
to  it  in  its  exchanges  with  it ;  but  this  would  be  very  exceptional  and 
only  resorted  to  in  the  case  of  notes  of  the  largest  denomination.  In 
active  seasons,  it  may  be  remarked,  the  natural  outflow  of  money 
from  New  York  enables  the  banks  there  to  send  country  National 
Bank  notes  away  nearly  as  fast  as  they  are  received,  so  that  there  is 
no  such  tendency  to  congestion  then,  as  when  the  money  market  is 
easy  and  sluggish. 

The  present  sumptuous  quarters  of  the  Clearing  House  are  a 
great  improvement  upon  the  old,  and  all  the  arrangements  of  the 
establishment  are  admirable,  and  carried  out,  under  Mr.  Camp's  ex- 
cellent management,  with  the  precision  and  regularity  of  clock  work. 
Instead  of  all  the  accommodations  being  on  the  top  floor,  and  the  line 
of  desks  being  in  circular  form,  as  in  the  Bank  of  New  York  build- 
ing, the  offices  and  bank  officers'  rooms  are  on  the  second  floor, 
while  the  large  square  room  where  the  exchanges  are  made  is  on  the 
third  floor,  and  the  desks  are  arranged  in  three  parallel  rows,  each 
desk  being  numbered,  and  having  the  name  of  the  particular  bank 
for  which  it  is  designed  lettered  on  a  silver  plate  in  front.  The  desks, 
which  present  an  elegant  appearance,  are  of  dark  polished  wood, 
and  provided  with  seats,  drawers,  and  other  conveniences  for  the 
clerks  occupying  them.  At  the  western  end  of  the  room  is  the 
manager's  gallery,  reached  by  a  short  flight  of  stairs,  and  there,  while 
the  exchanges  are  being  made — exclusive  of  the  manager — sit  the 
assistant  manager  and  a  couple  of  clerks,  besides  a  telegraph  oper- 
ator at  his  instrument. 

Accepting  an  invitation  from  Mr.  Camp  to  see  the  modus  operandi 
in  making  the  exchanges,  we  met  him  one  morning  last  March  in  the 
Manager's  Room.  At  five  minutes  to  ten  o'clock,  a  striking  bell 
touched  by  his  assistant  in  the  upper  room,  rang  over  his  head,  the 
usual  signal  to  insure  his  attendance  in  the  Clearing  House  gallery 
at  the  proper  time.  A  minute  later  he  led  the  way  up  a  private 
staircase  to  the  large  room,  and  through  it  to  the  gallery  above. 

Looking  down  from  this  elevation,  his  eye  took  in  the  entire 
apartment.  It  was  full  of  bank  clerks  and  messengers,  sitting,  stand- 
ing, and  lounging  at  their  respective  desks,  while  the  hum  of  con- 
versation among  them  was  busy.  The  settling  clerks  had  their 


THE  NEW  YORK   CLEARING  HOUSE.        51 

statements  before  them  ready  to  be  filled  up,  and  the  messengers  on 
the  other  side  of  the  desks  were  in  waiting  to  distribute  their  pack- 
ages. A  number  of  the  larger  banks  were  represented  by  two  clerks 
each,  to  expedite  business  during  the  making  of  the  exchanges. 
Meanwhile,  the  assistant  manager  and  one  of  the  clerks  were  busy 
entering  in  the  proper  printed  form,  or  Clearing  House  proof,  the 
amounts  the  different  banks  had  brought  to  exchange  in  currency 
checks,  including  bank  drafts,  and  the  second  clerk  was  similarly 
engaged  with  regard  to  the  gold  checks,  the  two  being  kept  distinct; 
and  a  separate  proof  of  each  made.  The  tickets,  or  Clearing  House 
blanks,  furnishing  these  figures,  were  being  handed  to  a  Clearing 
House  clerk  on  the  floor  by  the  bank  settling  clerks,  and  by  him 
sent  up  by  a  mechanical  contrivance  to  the  gallery.  Each  of  these — 
signed  by  the  settling  clerk  concerned — read  "  credit  Bank  of  Com- 
merce (or  whatever  the  bank's  name  might  be)  $341,626.12"  (or 
whatever  the  amount  of  the  checks  it  had  to  exchange  with  all  the 
other  banks  might  be),  and  from  the  whole  of  these  bank  tickets  the 
Clearing  House  was  enabled  to  ascertain  the  amount  of  the  credit 
exchange — figured  in  the  proofs  under  the  head  of  "  Banks  Cr." 

A  minute  or  two  before  ten  o'clock  the  manager  clanged  his  bell 
from  the  position  where  he  stood  in  the  center  of  the  gallery,  this 
being  the  signal  to  get  ready.  Immediately  all  fell  into  position,  like 
soldiers  who  had  been  standing  at  ease,  at  the  word  of  command. 
Every  man  was  at  his  desk,  and  ready  for  his  work  awaiting  the  next 
clang  of  the  bell,  which  was  heard  at  ten  precisely  by  the  clock  on 
the  opposite  wall.  Then  every  bank  messenger,  with  his  open  box 
or  satchel,  in  which  his  packages  were  arranged  in  order,  began  his 
slow  march  by  moving  to  the  next  desk,  where  he  deposited  his 
package  of  checks  intended  for  the  particular  bank  represented  there, 
receiving  therefor  a  receipt  in  the  shape  of  the  settling  clerk's  in- 
itials to  the  entry  of  the  amount  in  the  receipt  list  he  carried  with 
him.  From  this  he  passed  to  the  next  desk,  and  so  on  to  the  end  of 
the  lines,  doing  the  same  thing  at  each,  by  which  time  his  satchel  or 
box,  was  empty  and  he  was  back  at  his  own  desk  with  his  sheet 
showing  a  receipt  for  every  package  he  had  delivered. 

This  left  the  settling  clerks  with  the  packets  of  checks  on  their 
desks  which  constituted  their  debit  exchanges,  and  these  they 
entered  in  their  respective  statements  under  the  title  of  "  Banks 
Credit,"  which  were  checked  by  the  messengers  calling  back  the 
amounts  from  the  packets.  The  totals  of  these  statements  formed 
the  debits  of  the  banks  in  the  Clearing  House  proof.  Where  the 


52"        THE   NEW   YORK   CLEARING   HOUSE. 

checks  exchanged  were  few  they  were  generally  contained  in  envel- 
opes, and  where  they  were  many  they  were  made  up  in  bundles. 

The  exchanges  are  usually  made  in  eight  minutes,  that  being  the 
interval  which,  on  an  average,  elapses  between  each  messenger's 
starting  from  his  desk  and  getting  back  to  it  again,  but  in  this  in- 
stance the  time  was  slightly  exceeded,  when  the  manager  gave  the 
bell  signal  that  all  the  exchanges  had  been  made.  Immediately  each 
messenger  took  his  return  exchanges,  left  there  as  described, from  his 
desk,  and  after  receiving  from  the  settling  clerk  a  ticket  showing  the 
amount  of  the  debit  and  credit  exchanges,  and  the  consequent  bal- 
ance for  or  against  his  bank,  he  took  his  departure.  A  very  short 
time  afterwards,  depending  upon  its  nearness  to  the  Clearing  House, 
the  bank  was  thus  made  aware  of  the  balance  it  would  have  to 
receive  from  or  pay  to  all  the  other  banks  collectively  through  the 
Clearing  House  that  day.  There  might  be  slight  errors  in  the  figur- 
ing, owing  to  haste,  but  the  ticket  would  be  substantially  correct. 

While  the  same  time  is  occupied  by  each,  some  of  the  clerks,  in 
making  the  exchanges,  owing  to  their  expertness  in  figures,  are 
enabled  to  return  them  to  their  respective  banks  before  others. 
They  left  singly,  or  by  twos  and  threes,  until  only  the  settling  clerks 
remained,  the  assistant  settling  clerks  having  left  about  the  same 
time.  These  clerks  now  busied  themselves  in  making  up  their 
statements,  showing  the  position  of  their  own  banks  towards  every 
other,  and  the  rapidity  with  which  some  of  them  worked  was  shown 
by  their  sending  their  tickets  up  to  the  gallery  in  less  than  ten 
minutes  afterwards.  These  tickets  showed  the  amount  of  the  debit 
and  credit  exchanges  and  the  consequent  debit  or  credit  balances  of 
the  respective  banks  for  the  information  of  the  Clearing  House,  and 
the  figures  were  transferred  to  the  proper  proofs  as  fast  as  they 
were  received  by  the  assistant  manager  and  clerks. 

Of  the  fifty-nine  banks  belonging  to  the  Clearing  House,  thirty- 
six  exchange  gold  as  well  as  currency  checks,  separate  tickets  being 
furnished  for  gold  and  currency,  and  fifteen  of  their  number  have 
the  figures  of  their  own  settling  clerk's  tickets  telegraphed  to  them 
on  account  of  their  buildings  being  distant  from  the  Clearing  House, 
and  the  consequent  delay  in  the  return  of  their  messengers.  This 
number  is  liable  to  vary,  thirty  having  formerly  received  the  infor- 
mation by  telegraph.  Of  the  whole  number  of  associated  banks 
forty-five  are  National  and  fourteen  are  State  institutions,  and  these, 
as  already  intimated,  not  only  make  their  own  exchanges,  but  those 
of  the  other  nineteen  banks  in  the  city. 


THE      NEW      YORK      CLEARING      HOUSE.  53 

At  twenty-five  minutes  past  ten,  the  manager,  addressing  the 
settling  clerks,  said  "  The  gold  proof  is  made  !  "  previous  to  which, 
of  course,  the  thirty-six  clerks  representing  the  banks  exchanging 
gold,  had  sent  up  their  tickets  to  the  Clearing  House  clerk  in  charge 
of  the  gold  proof,  who,  having  transcribed  them,  found  the  totals 
agreed,  and  that  they  were  therefore  correct.  A  proof  was  made  at 
the  first  trial,  but  only  in  one  instance  in  the  history  of  the  Clearing 
House,  has  a  currency  proof  been  made  on  the  first  trial.  Some  one 
or  more  of  the  clerks  makes  an  error  in  figuring,  which  prevents  the 
aggregate  debit  and  credit  balances  agreeing,  but  they  are  allowed 
until  five  minutes  to  eleven  to  correct  errors  in  their  tickets,  after 
which  time,  however,  fines  are  imposed  for  each  correction,  and 
at  half  past  eleven  the  fines  are  doubled,  and  at  twelve  quadrupled. 
Eleven  o'clock  is  the  average  time  at  which  a  currency  proof  is 
made,  although  on  one  occasion  it  was  as  late  as  five  minutes  to  one 
before  the  result  was  attained.  This  occurred  after  the  removal  to  the 
new  building,  and  the  difference  which  caused  the  unusual  delay  was 
only  two  dollars,  owing  to  a  blind  figure  nine  being  mistaken  for 
seven.  At  half  past  ten,  all  the  currency  tickets  having  been  previously 
received  from  the  settling  clerks,  and  their  figures  duly  transferred  to 
the  proof  sheet,  and  the  additions  made — the  manager  reading  from 
his  assistant's  memorandum,  said  "  The  difference  is  $4,8265% ! " 
The  settling  clerks  immediately  applied  themselves  to  the  correction 
of  their  statements,  and  corrected  tickets  were  sent  by  two  or  three 
of  them  to  the  gallery.  A  few  minutes  later  he  said- "$212  is  now 
the  difference!  "  Another  corrected  ticket  came  up,  but  this  merely 
reduced  the  difference  to  a  smaller  sum,  so  at  five  minutes  to  eleven — 
without  informing  them  what  difference  still  remained — he  ordered 
the  clerks  of  two  banks,  at  desks  far  apart,  to  pass  with  their  state- 
ments up  and  down  the  lines,  and  visit  every  other  bank,  one  to  the 
right  and  the  other  to  the  left.  This  was  done,  and  all  the  other 
clerks  followed  suit  in  their  turn,  and  called  off  the  balances  to  the 
debit  or  credit  of  each,  while  the  clerks  of  the  visited  banks  called 
back  the  amounts  charged.  This  comparison  was  one  of  several  ways 
which  are  adopted  for  making  such  discoveries,  and  it  is  usually  the 
final  method  of  revision,  the  test  being  certain  to  make  the  proof, 
provided  the  additions  are  correct. 

We  may  here  mention  that  each  settling  clerk  had  previously 

sent  to  each  of  his  fellows  a  ticket  showing  the  amount  he  had 

brought  to  exchange  with  his  particular  bank,  the  amount  he  had 

received  from  him,  and  the  resulting  debit  or  credit  balance,  the 

VOL.  in. — 39 


54  THE     NEW      YORK     CLEARING      HOUSE. 

same  corresponding  with  his  statement  of  the  position  of  his  own 
bank  toward  every  other.  If  any  error  existed  in  this,  the  clerk  to 
whom  it  was  sent  discovered  it  by  comparison  with  the  original 
statement  in  his  hands. 

The  clerks  having  passed  slowly  round,  pausing  to  call  off  the  fig- 
ures at  each  desk,  the  error  was  discovered.  A  few  moments  later — 
the  accuracy  of  the  general  proof  having  been  determined  by  the  agree- 
ment of  the  debit  and  credit  columns  with  each  other,  and  also  by  the 
agreement  of  the  balance  columns — the  manager  called  out  "  The  proof 
is  made  !  "  and  the  settling  clerks  were  at  liberty  to  leave,  which  they 
had  not  been  before  since  ten  o'clock,  without  the  manager's  permis- 
sion. The  making  of  the  comparison  described  occupied  ten  minutes, 
so  that  the  proof — showing  at  a  glance  the  total  amount  of  the  ex- 
change, the  amount  received  from  each  bank,  the  amount  of  the  return 
exchange,  or  checks  taken  away  by  each  bank,  the  balance  owing  to  or 
by  each,  and  the  total  balance  of  the  exchanges — was  not  announced 
till  a  little  more  than  five  minutes  past  eleven.  After  this  the  manager 
called  off  from  the  balance  sheet  handed  him  by  his  assistant,  the 
amount  in  thousands  of  dollars,  to  the  debit  or  credit  of  each  bank 
arising  from  the  exchanges  of  the  day,  which  the  settling  clerks  trans- 
ferred to  the  corresponding  blanks  before  them,  and  took  away  for  the 
information  of  their  respective  institutions,  such,  however,  not  being  at ' 
all  essential  to  the  transaction  of  their  business  at  the  Clearing  House. 
It  ought  to  be  stated  that  although  the  manager  remained  in  the  gal- 
lery on  this  occasion  until  after  the  proof  was  made,  he  usually  goes 
down  to  his  office  as  soon  as  the  exchanges  have  been  completed, 
leaving  his  assistant  to  preside  during  the  rest  of  the  time. 

By  ten  minutes  past  eleven  all  the  settling  clerks  had  taken  their 
departure,  not  to  return  until  the  next  morning  at  the  usual  hour, 
exchanges  at  the  Clearing  House  being  made  only  once  a  day,  and 
the  room  in  question  being  meanwhile  unused.  The  remaining 
business  of  the  day  was  transacted  on  the  floor  below,  the  debit 
banks  sending  their  messengers  with  the  amounts  due  to  the  Clearing 
House  between  half  past  twelve  and  half  past  one  and  receiving 
receipts  therefor,  and  the  credit  banks  sending  for  the  balances  due 
to  them  at  half  past  one  or  later  and  giving  receipts  therefor  in  a 
large  book  in  the  outer  office  provided  for  the  purpose,  but  in  the 
case  of  gold  balances,  the  debtor  banks  were  required  to  pay  their 
balances  to  the  manager  before  half  past  twelve,  while  the  creditor 
banks  were  entitled  to  receive  those  in  their  favor  at  that  time,  or  as 
soon  after  it  as  practicable,  in  accordance  with  the  provisions  of  the 


THE      NEW      YORK      CLEARING      HOUSE.  55 

constitution.  In  this  way  from  seventy-five  to  a  hundred  and 
twenty  millions  a  day  are  cleared  by  the  payment  of  balances 
amounting  to  between  three  and  four  millions  only,  the  average  pro- 
portion of  the  balances  to  the  exchanges  being  about  four  per  cent. 

The  Clearing  House,  it  will  be  seen,  only  retains  custody  of  the 
funds  which  it  thus  holds  as  trustee  for  an  hour  or  two,  and  every 
bank  belonging  to  the  Clearing  House  keeps  a  current  account  with 
the  latter,  debiting  it  with  all  money  sent  and  crediting  it  with  all 
returned. 

A  chapter  might  be  written  on  the  settling  clerks  and  their  humors, 
but  suffice  it  to  say  that  they  are  for  the  most  part  very  young  men, 
with  the  same  tendency  as  stock-brokers  to  become  unruly  and 
hilarious  on  slight  provocation  when  not  controlled  by  the  presence 
of  the  manager,  whose  personal  influence  over  them  is  far  greater 
than  that  of  any  of  his  subordinates.  The  discipline  he  maintains 
among  them  is  perfect,  for  he  knows  when  to  be  firm  and  when  to  be 
kind ;  but  in  his  absence  they  have  been  known  to  be  guilty  of  most 
unseemly  and  noisy  mirth  over  trivial  incidents.  Most  of  them  are 
quick  at  figures,  and  some  of  them  deserve  to  be  called  lightning 
calculators  ;  but  others  are  slow,  and  a  few  are  dull  boys  hardly  equal 
to  the  work.  Many  bank  officers  are,  however,  inclined  to  think  any 
junior  clerk  good  enough  to  send  to  the  Clearing  House,  provided  he 
escapes  with  few  fines,  and  they  act  accordingly,  although  there  are 
not  a  few  of  an  opposite  way  of  thinking  who,  apart  from  their 
objection  to  fines,  employ  the  quickest  and  most  intelligent  of  their 
youngest  employes  in  the  service.  Of  course  among  so  many,  changes 
are  of  frequent  occurrence,  yet  these  clerks,  where  they  show  aptitude 
for  the  business,  usually  remain  for  two  or  three  years  attending  to 
this  and  other  bank  duties,  before  being  promoted  to  higher  positions 
in  their  respective  banks. 

To  Albert  Gallatin  is  due  the  credit  of  having  made  the  first  propo- 
sition for  the  establishment  of  a  New  York  Clearing  House.  This 
he  did  in  a  pamphlet  published  in  1841,  and  entitled  "  Suggestions  on 
the  Banks  and  Currency  of  the  several  United  States,"  in  which  he 
said :  "Few  regulations  would  be  more  useful  in  preventing  danger- 
ous expansions  of  discounts  and  issues  on  the  part  of  the  city  banks, 
than  a  regular  exchange  of  notes  and  checks,  and  an  actual  daily  or 
semi-weekly  payment  of  the  balances.  It  must  be  recollected  that 
it  is  by  this  process  alone  that  a  Bank  of  the  United  States  has  ever 
acted  or  been  supposed  to  act  as  a  regulator  of  the  currency.  Its 
action  would  not  in  that  respect  be  wanted  in  any  city  the  banks  of 


5G  THE      NEW      YORK      CLEARING      HOUSE. 

which  would  by  adopting  the  process  regulate  themselves.  It  is  one 
of  the  principal  ingredients  of  the  system  of  the  banks  of  Scotland. 
The  bankers  of  London  by  the  daily  exchange  of  drafts  at  the  Clear- 
ing House  reduce  the  ultimate  balance  to  a  very  small  sum  ;  and  that 
balance  is  immediately  paid  in  notes  of  the  Bank  of  England.  The 
want  of  a  similar  arrangement  among  the  banks  of  this  city  produces 
relaxation,  favors  improper  expansions,  and  is  attended  with  serious 
inconveniences.  The  principal  difficulty  in  the  way  of  an  arrange- 
ment for  that  purpose  is  the  want  of  a  common  medium  other  than 
specie  for  effecting  the  payment  of  balances.  These  are  daily  fluctu- 
ating, and  a  perpetual  drawing  and  re-drawing  of  specie,  from  and 
into  the  banks,  is  unpopular  and  inconvenient." 

It  was  Mr.  Francis  W.  Edmonds,  formerly  cashier  of  the  Mechan- 
ics' Bank,  who  originally  planned  the  issue  of  what  are  now  known  as 
Clearing  House  certificates,  he  having  in  1852  induced  four  of  the 
largest  banks  to  join  his  own  in  depositing  a  million  dollars  in  coin 
with  the  latter,  for  which  it  issued  its  certificates,  and  those  were  re- 
ceived instead  of  coin  by  the  other  banks  in  payment  of  balances. 
Thus  the  way  was  paved  to  the  establishment  of  the  Clearing  House 
about  a  year  later,  whose  constitution  was  prepared  by  Mr.  George 
Curtis,  and  adopted  on  the  5th  of  June,  1854. 

The  annual  reports  of  the  Clearing  House  since  its  organization 
furnish  some  interesting  and  suggestive  figures,  which  reflect  not 
only  the  natural  growth  of  the  banking  business  of  the  country,  but 
the  effect  of  the  irredeemable  currency  issues  in  stimulating  commer- 
cial and  monetary  activity.  While  the  total  exchanges  of  the  New 
York  city  banks  amounted  to  only  $5,915,742,758  in  1 860-61,  they 
aggregated  $26,032,384,342  in  1864-65,  an  increase  of  more  than 
twenty  thousand  millions  of  dollars.  The  increase  was  progressive 
in  about  an  equal  ratio  with  the  increase  of  the  national  debt,  the 
exchanges  having  been  $6,871,443,591  in  1862;  $14,867,597,848  in 
1863,  and  $24,097,196,655  in  1864.  But  the  feverish  activity  and 
speculative  excitement  born  of  inflation  went  on  increasing  after  the 
volume  of  the  currency  had  reached  its  maximum,  and  continued 
after  it  had  begun  to  dwindle  largely  under  the  withdrawal  from 
circulation  of  interest  bearing  legal  tender  notes.  Thus  in  1866  the 
exchanges  rose  to  $28,711,146,914,  and  went  on  swelling  until  they 
reached  $37,407,028,987,  their  culminating  point  in  1869.  In  the  fol- 
lowing year,  however,  they  suddenly  fell  off  to  twenty-seven  thousand 
millions,  but  recovered  to  thirty-three  thousand  millions  in  1873.  The 
depression  succeeding  the  panic  of  that  year  became  strikingly  appa- 


THE   NEW   YORK   CLEARING  HOUSE.        57 

rent  in  the  exchanges  for  1874,  their  aggregate  declining  to  less  than 
twenty-one  thousand  millions,  and  only  recovering  to  twenty-three 
thousand  millions  in  1875.  But  even  this  sum  appears  very  large  in 
comparison  with  the  five  to  eight  thousand  millions  within  which 
were  embraced  the  exchanges  of  each  year  from  1854  to  1862  inclu- 
sive. It  is  noticeable  that  the  same  signs  of  depression  were  visible 
in  the  Clearing  House  returns  after  the  panic  of  1857,  the  exchanges 
having  declined  from  $8,333,226,718  in  1857 — tne  heaviest  up  to  that 
time — to  $4,756,664,386  in  1858,  the  lightest  ever  recorded. 

The  average  daily  exchanges  ranged  from  a  little  over  fifteen 
millions  in  the  year  last  named  to  about  a  hundred  and  twenty-one 
and  a  half  millions  in  1869,  and  the  average  daily  balances  paid  in 
money  from  less  than  a  million — namely  $940,565 — in  1855  to  nearly 
four  millions — namely  $3,939,266 — in  1872,  showing  a  percentage 
of  cash  balances  to  exchanges  varying  from  6.6  in  1858  to  3.  in 
1869,  and  an  average  of  4.1  for  the  first  twenty-two  years  of  the 
business  of  the  Clearing  House.  The  average  daily  exchanges  and 
balances  during  the  same  period  were  respectively  $61,102,416  and 
$2,491,440,  while  the  exchanges  for  the  twenty-two  years  aggregated 
the  enormous  sum  of  $413,464,866,992,  which  involved  the  payment 
of  balances  in  settlement  amounting  to  $16,858,398,139. 

The  smallness  of  the  balances  paid  in  money  by  the  banks  to  e*ch 
other  in  proportion  to  their  exchanges  show  not  only  the  advantages 
of  the  system  of  clearing  pursued,  but  how  largely  checks  and  bank 
drafts  perform  the  functions  of  currency.  The  banks  belonging  to 
the  Association  have  varied  in  number  from  forty-six  after  the  panic 
of  1857  (against  fifty  before  it)  to  sixty-two  in  1871,  and  their  capital 
increased  almost  steadily  from  forty-seven  millions  in  1854  to  nearly 
eighty-four  and  a  half  millions  in  1871,  but  in  1875  it  had  dwindled 
to  $80,435,200,  and  it  has  since  undergone  further  diminution  by  the 
reduction  of  the  capital  of  the  Bank  of  the  State  of  New  York — 
since  readmitted  to  the  Association — from  $2,000,000  to  $800,000. 

The  statistics  we  have  quoted  give  a  very  good  idea  of  the  banking 
movement  at  the  monetary  center,  and  to  a  certain  extent,  hold  up 
the  mirror  to  that  of  the  entire  country.  In  them,  too,  in  their 
detailed  form,  we  see  reflected  the  ebb  and  flow  of  the  currency. 
The  loans  attain  their  highest  point  in  August,  when  money  is 
cheapest  and  most  abundant,  following  which  they  gradually  decline 
till  they  reach  their  lowest  point  in  November,  or  early  in  December  ; 
then  a  rising  average  becomes  perceptible,  and  continues  until  the  end 
of  March,  when  an  outward  flow  of  money  again  sets  in  to  provide 


58  THE      NEW      YORK      CLEARING     HOUSE. 

for  the  settlements  which  take  place  in  Pennsylvania  and  several 
other  states  on  the  first  of  April,  as  regularly  as  leases  are  renewed 
in  New  York  on  the  first  of  May,  but  after  the  middle  of  April  the 
return  flow  begins  and  continues  until  the  vacuum  caused  by  its  with- 
drawal has  been  filled,  both  movements  being  as  regular  as  the  tides. 
With  respect  to  the  affairs  of  the  Clearing  House  itself,  it  need 
only  be  said  that  they  are  on  a  solid  and  satisfactory  basis.  The 
present  building  cost  the  Association  $215,000,  in  addition  to  which 
it  expended  $135,000  for  alterations.  Before  its  purchase  it  had 
accumulated  funds  amounting  to  a  hundred  thousand  dollars,  and  in 
order  to  provide  the  difference  it  authorized  and  then  subscribed  for 
$250,000  of  Clearing  House  building  stock,  the  amount  to  be  equally 
distributed  among  the  banks,  and  the  stock  certificates  to  bear  interest 
at  the  rate  of  seven  per  cent,  per  annum,  payable  semi-annually.  The 
portion  of  the  building  not  used  for  Clearing  House  purposes  is  leased 
and  the  income  therefrom  nearly  equals  the  amount  of  interest  paya- 
ble on  these  certificates,  while  the  deficiency  is  charged  among  the 
ordinary  expenses  of  the  Clearing  House.  The  latter,  including  the 
manager's  salary  of  $10,000,  amount  to  about  $30,000  a  year,  exclu- 
sive of  any  deficiency  from  the  source  referred  to,  but  the  Association 
was  assessed  $40,000  for  1876.  Exclusive  of  the  manager,  the  staff 
of  .persons  employed  by  it  consists  of  the  assistant  manager,  four 
clerks  and  a  private  policeman.  And  now  all  has  been  told  that  the 
average  reader  will  probably  care  to  know  about  the  New  York  Clear- 
ing House,  which  is  superior  to  any  establishment  of  the  kind  in  any 
other  city  of  the  United  States,  and  which  might  be  copied  with 
profit  to  themselves  by  the  banks  of  London  and  other  European 
capitals,  its  plan  being  much  more  simple,  perfect  and  better  calcu- 
lated for  the  purpose  than  theirs.  Indeed,  in  view  of  the  fact  that 
the  exchanges  have  been  made  and  the  settlements  effected  since  its 
organization,  without  the  slightest  error  or  loss,  and  with  such 
economy  of  time  and  labor  as  we  have  described,  it  seems  hardly  pos- 
sible for  any  improvement  in  its  methods  to  be  made,  although  its 
scope  might  be  enlarged  in  the  manner  suggested,  with  advantage  to 
both  the  banking  interest  and  the  public. 


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Otir  Late  Panic.  Universal  Education,  Rev.  Ray  Palmer,  D.D. 

Fires  in  American  Cities,  Prof.  A.  P.  Peabody.  The  Prussian  Church  Law,  Baron  Von  Holtzendorft, 

Deep-Sea  Exploration,  Prof.  Wm.  B.  Carpenter.  International  Arbitration,  Theodore  D.  Woolsey. 

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Vi  orking  Classes  in  Europe,  Thomas  Hughes.  Practical  Work  in  Painting,  Philip  Gilbert  Hamerton. 

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Upper  Schools,  James   McCosh.  Nationalism  and  Internationalism. 

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JANUARY. 

Vienna  and   the   Centennial,  Prof.  James   M.  Hart,        The   University  System  in  Italy,  Pwf.   Angelo  de 

N.  Y.  Gubematis,  Florence. 

Baron  Liebig,  Prof.  August  Vogel,  Munich.  The  Guarantee  of  Order  and  Republican  Government 

The  Association  for  the  Reform  and  Codification  of  in  the  States,  Hon.  T.  M.  Cooley,  Mich.  University, 

the  Law  of  Nations,  Dr.  James  B.  Miles,  General        Ideas  in  Nature  Overlooked  by  Dr.  Tyndall,  James 
Secretary.  McCosh,  D.D.,  LL.D.,  Princeton,  N.  J. 

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The    New   York  Gold   Room,    Kinahan  Cornwallis,         The    Supernatural    as    Evidence,    R.   Payne  Smith, 

New  York.  D.D.,  Dean  of  Canterbury,  England. 

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MAY. 
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erton,  Esq.  ander  Delmar,  Ph.D. 

The    Prussian  Company  Column,  Maj.-Gen.  Emory        Life  Insurance,  Prof.  Simon  Newcomb. 

Upton,  U.S.A.  The  Difficulties  of  Republicanism  in  Europe,  Edward 

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G.  W.  Leyburn,  D.D. 

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JULY. 

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Works.  London. 

India  in  some  of  its  Social  and  Political  Aspects,  A.         French  Literature  under  the  First  Empire,  Princess 

Phillips,  Esq.,  Calcutta.  Dora  d'Istria,  Florence. 

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SEPTEMBER. 

Charles  (Tennyson)  Turner.  Industrial  Art  Education  in  the  United  States. 

American  Constitution  in  1787  and  1866.  An  Ancient  Arabic  Prize  Poem,  Prof.  E.  H.  Palmer, 

The  Influence  of  Steam  and  Electricity.  Cambridge,  England. 

Salmon  Portland  Chase. 
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NOVEMBER. 

Henry  Waflsworth  Longfellow  and  his  Writings.  The  New  York  Stock  Exchange. 

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VOL  111-1878. 


JANUARY. 

The  Herzegovinian  Question.  Dante  and  Beatrice,  Charles  Tennyson  Turner. 

The  Conflict  of  Science  and  Religion,   Rev.   E.  A.        Retrospective  Legislation  and   Grangerism,   Francis 

Washburn,  D.D.  Wharton,  LL.D. 

Unger's  Etchings,  Philip  Gilbert  Hamerton.  Insectivorous  Plants,  Prof.  J.  W.  Dawson. 

Psychology  of  Murder,  Baron  Franz  von  Holtzendorff. 
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MARCH. 

Professor  Cairnes,  George  Walker.  The  Principle  of  Philosophy,  Brother  Azarius. 

Bardism,  Aneurin  Vardd.  The  Old  and  New  South,  John  C.  Reed. 

The  Chemical  Action  of  Plants,  Prof.  August  Vogel.        The  Structure  of  the  Universe,  Prof.   R.  H.  Proctor. 

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MAY. 

Reform  in  Higher  Education.  United  States  Land  Grants,  R.  T.  Colburn. 

Dean  Swift,  George  Barnett  Smith.  International  Prison  Reform,  Dr.  E.  C.  Wines. 

Some   Checks  and  Balances  in  Government,  Judge        Localities   of   Burns,   a   Sonnet,   Charles   Tennysoa 

T.  M.  Cooley.  Turner. 

The  Currency  Question  in  Austria,  Hon.  Max  Wirth.        The  Chaldean  Genesis,  Prof.  J.  W.  Dawson. 
Three  Old  and  Three  New  Poets,  Bayard  Taylor. 
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JULY. 

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Mr.  George  Ticknor,  E.  P.  Whipple.  Ionian  Name,  Prof.  Ernst  Curtius. 

The  American  Republic,  Gen.  Franz  Sigel.  Mr.  Francis  Parkman's  Histories,  Julius  H.  Ward. 

The  Newspaper  Press  and  the  Law  of  Libel,  David        Climate  and  Time,  Prof.  A.  Winchell. 
Dudley  Field. 

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SEPTEMBER. 

The  Price  of  Labor  in  England,   Thomas    Brassey.        How  New  Italy  became  a  Nation,  Signer  C.  Poz- 
The  Sea  Shell  and  the  Sonneteer,  Charles  Tennyson  zoni. 

Turner.  The  Grange  and  the  Potter  Law. 

The  New  York  Clearing  House.  Abdul-Aziz  and  his  Successors. 

The  Productive  Forces  of  Bavaria,  Hon.  Alex.  Delmar.        Loid  Macaulay,  Edward  A.  Freeman,  D.C.L. 

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land,  Edward  A.  Freeman,  D.C.L.  French  Literature  of  the  Reformation,  Dora  d'Istria, 

Transcendentalism   in    New    England,   Dr.    Samuel  Princess  Ghika. 

Osgood.  The  Prussian  Evangelical  Church,  Dr.  J.  B.  Dorner. 

Journals  and  Journalism  in    Italy,  Prof.  Angelo  de        The  Chinese  Question  in   the    United  States,   Ho*. 
Gubernatis.  E.  D.  Mansfield. 

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VOL.  IY.-1877. 


JANUARY. 

Olympia  in  the  Berlin  Museum,  Ernst  Curtius.  Daniel  Deronda. 

A  Sonnet,  William  Cullen  Bryant.  Political  Corruption— the  Root  of  the  Eyfl. 

The  Paris  Salon  of  1876,  M.  Charles  Gindriez.  Contemporary  Literature. 

Prof.  Huxley  in  New  York,  Principal  Dawson.  Art  in  Europe. 

Japan  Among  the  Nations.  Bimonthly  Notes  on  Scientific  Progress. 

Contemporary  Events. 

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MARCH. 

Republicanism  under  President  Grant.  The  University  of  Upsala. 

Safety  in  Dwellings  and  Public  Buildings.  James  Russell  Lowell  and  Modern  Literary  Criticism. 

Two  Past  Ages.    A  Sonnet.  Contemporary  Literature. 

Wit  and  Humor  in  Germany.  Art  in  Europe,  P.  G.  Hamerton. 

Saga  Civilization,  Hj.  Hj.  Boyesen.  Science  Notes. 

Responsible  Government .  Contemporary  Events. 

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MAT. 

The  New  Administration.  Tennyson,  Bayard  Taylor. 

The  Life  Insurance  Question,  Charlton  T.  Lewis,  Esq.  Our  Foreign  Service,  Hon.  John  Jay 

Disestablishment   of   the    Church    of   England,   Dr.  Contemporary  Literature. 

James  H.  Rigg.  Art  in  Europe,  P.  G.  Hamerton. 

The  Philadelphia  Exhibition.     Part  I.,   Mechanism  Contemporary  Events. 

and  Administration,  Gen.  Francis  A.  Walker. 

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JULY. 

The  Turks  in  Europe,  Charles  Kendall  Adams.  Barry  Cornwall  and   some    of  his    Contemporaries, 

Ought  Russia  to  Prevail  ?  Edwin  P.  Whipple. 

The  Old  Dutch  and  Flemish  Masters,  Philip  Gilbert        The  Feasibility  of  a  Cod*"  of  International  Law,  Ex- 

Hamerton.  Gov.  Emory  Washburn. 

The  Late  World's  Fair— The  Philadelphia  Exhibition.        Recent  American  and  European  Books.    Art  Letter 
Part  II.,  The  Display,  Prof.  Francis  A.  Walker.  No.  10,  Philip  Gilbert  Hamerton. 

Contemporary  Events. 
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SEPTEMBER. 

The  Communist  and  the  Railway,  W.  M.  Grosvenor.  Judicial    Partisanship.      I.,    Queen  Caroline's  Case, 
To  Charles  Tennyson  Turner,  Rev.  Richard  Wilton.  Dr.  Franc's  Wharton. 

The  Letters  of  Junius,  Alexander  H.  Stephens.  The   Late   World's   Fair.     Part   III.,   The  Display, 
Modern  Armies  and  Modes  of  Warfare,  Prof.  Sheldon  Prof.  Francis  A.  Walker. 

Amos.  The  President's  Southern  Policy. 

The    Administration    of    American    Cities,    Simon  Recent  American  and  European  Books.     Art  Letter 

Sterne.  No.  n,  Philip  Gilbert  Hamerton. 

Thomas  De  Quincey,  John  H.  Ingram.  Contemporary  Events. 

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NOVEMBER. 

In  Memory   of  John   Lothrop    Motley.     A   Sonnet,  Islam   and   the   Ottoman   Empire,   J.   D.  Beugless, 

William  Cullen  Bryant.  Chaplain  U.  S.  N. 

Present    Phases    of  the  Currency  Question,   Horace  The  Paris  Salon,  Ch.  Gindriez. 

White.  Schopenhauer's  Philosophy,  Charles  F.  Thwing. 

The     Non-Dramatk    in     Shakespeare,    H.    Schutz  Motley's  Appeal  to  History.     Hon.  John  Jay. 

Wilson.  Recent  American  and  European  Books.     Art  Letter 

Judicial  Partisanship.     II.,  Francis  Wharton,  LL.D.  No.  12,  Philip  Gilbert  Hamerton, 

Dr.  Mahan  on  the  American  War,  Gen.  J.  H.  Wilson.  Contemporary  Events. 

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VOL  V.-1878. 


JANUARY. 

Thiers,  a  Sonnet,  John  Greenleaf  Whittier.  Money  and  its  Laws,  Prof.  W.  G.  Sumner. 

Elements  of  National  Wealth,  I.,  Hon.  David  A.  Wells.  Imperial  Federalism  in  Germany,  Baron  Franz  von 
The  Second   Harvest  at  Olympia,  Ernest  Curtius,  Holtzendorff,  Munich. 

Berlin.  Modern  Love,  I.,  Dr.  Samuel  Osgood. 

First  Impressions  of  Athens,  Edward  A.  Freeman,  The    Count    of   the  Electoral  Vote,   Alexander   H. 

D.C.L.,  England.  Stephens. 

Sumner's  Place  in  History,  Major  Ben.  Perley  Poore.  Art  in  Europe,  XIII.,  Philip  Gilbert  Hamerton. 

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MARCH. 

Reminiscences  of  Alexander  H.  Stephens  vs.  Those        The  Method  of  Electing  the  President,  Hon.  Thos. 

of  Gen.  Richard  Taylor,  Hon.  Alex.  H.  Stephens.  M.  Cooley,  Hon.  Abram  S.  Hewitt. 

Elements  of  National  Wealth,  II.,  Hon.  David  A.        Modern  Love,  II.,  Rev.  Samuel  Os^ood,  New  York. 

Wells.  The  Relation  of  Morality   to  Religion,  Prof.  A.  P. 

The   Mexico  of  the  Mexicans,  Will  T.   Pritchard,  Peabody,  of  Harvard  College. 

F.R.S.,  F.A.S.L.,  Mexico.  Silver  in  Art.  Edwin  C.  Taylor. 

Learned  Womeu  of  Bologna,  I.  -II.,  Madame  Villari,        Imperial   Federalism  in  Germany,  II.,  Baron  Frank 

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MAY. 

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James  Anthony  Froude,  LL.D.,  England.  II.,  The  Gospel  of  John   Lyman  Abbott,  D.D. 

The  New  King  of  Italy  and  the  New  Pope,  Professor        Learned  Women  of  Bologna,  III.-IV.,  Madame  Vil- 

Anselo  De  Gubernatis,  Italy.  lari,  Italy. 

War,  Three  Sonnets,  Rev.  Ray  Palmer,  D.D.  The  Moral  Problem,  I.,  Mark  Hopkins,  D.D. 

The  United  States  Provisional  Court  for  the  State  of  The  Future  of  the  Erie  Canal,  John  B.  Jervis,  C.E. 

Louisiana,  Judge  Charles  A.  Peabody.  Elements  of  National  Wealth,  III.,  Hon.  David  A. 
Reason  and  Sentiment,  Henry  C.  Pedder.  Wells. 

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The  Chinese  Puzzle,  E.  L.,  San  Francisco.  James  Anthony  Froude. 

The  Moral  Problem,  II.,  Ex-President  Mark  Hopkins.         The  Centenary  of  Rousseau,  I.,  Samuel  Osgood. 
The  French  Exhibition,  I.,  Charles  Gindriez,  Archi-        Size  and  Organization  of  Armies,  Gen.  Jas.H.  Wilson. 

tect  Industrial  Reconstruction,  Edward  Atkinson. 

Elements  of  National  Wealth,  IV.,  David  A.  Wells.        Mr.  Seward  and  Mr.  Motley,  Hon.  John  Bigelow. 
Art  in  Europe,  XIV.,  Philip  Gilbert  Hamerton. 
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SEPTEMBER. 

The  Cry  of  Labor,  President  Chadbourne,  Williams        Russia,  II.,  Karl  Blind. 

College.  Pilgrims  in  the  East,  Selah  Merrill,  Archaeologist. 

Shadow  of  a  Gourd,  Poem,  Alan  Brodrick,  England.  Centenary  of  Rousseau,  II.,  Samuel  Osgood,  D.D. 

Ex-Premier  Gladstone,  An  American.  Changes  m  American  State  Constitutions,  Wilmot  L, 

European  Politics,  E.  de  Pressenc6,  Dep.  France.  Warren. 

Queen  Mercedes,  Poem,  Joel  Benton.  Stanley's  Explorations,  Gen.  Millen,  of  N.  Y.  Herald. 

Spelling  or  Shakespeare's  Name,  E.  S.  Van  Winkle. 

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NOVEMBER. 

Does  Humanity  Require  a  New  Revelation?  Prof.        The  Final  Philosophy,  Rev.  John  Hall,  D.D..N.  Y. 
P.  G.  Tait,  College,  Edinburgh.  Successful  Mediocrity,  Albert  Rhodes,  U.  S.  Consul, 

Pending  Ordeals  of  Democracy,  George  W.  Julian,  Rouen. 

Indiana.  Social  Democracy  in  Germany,  Johannes  von  Huber, 

Government  Library,  A.  R.   Spofford,   Librarian  of  Professor  of  Philosophy,  Munich. 

Congress.  After  Specie  Resumption—  What  ?     Horace  White. 

A  Shocking  Story,  Wilkie  Collins. 

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INTERNATIONAL  REVIEW 

FOR    1879. 


This  Review,  heretofore  issued  as  a  "  Bi-monthly,"  will  be  continued  upon  a  new  plan,  and 
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A.  S.  BARNES   &   CO.,  PUBLISHERS, 

in  &  113  William  Street,  New  York. 


History  of  the  City  of  New   York:     its 

origin,  rise  and  progress,  by  Mrs.  MARTHA  J. 
LAMB.  Illustrated  with  sixteen  full-page  engrav- 
ings in  tint  ;  nine  rare  and  valuable  maps  of  the 
City  at  different  periods  ;  and  one  hundred  and 
thirty-three  engravings  scattered  through  the 
text,  all  by  the  most  eminent  artists  and  engrav- 
ers of  the  country. 

SOLD    ONLY    BY    SUBSCRIPTION. 

Price  in  Cloth,  gilt  tops,  uncut  edges,  $10 ;  Sheep  $11 ;  Half  Morocco  $12 ; 

Full  Morocco  $15, 

"  The  author  of  this  work  is  showing  herself  a  worthy  historian  of  this  glistening 
and  fecund  metropolis,  which  is  in  reality  one  of  the  most  interesting  cities  of  the 
world,  though  all  of  its  residents  are  not  aware  of  the  fact.  It  has  enjoyed  many 
changes,  political,  social,  and  organic,  during  the  two  and  a  half  centuries  of  its  exis- 
tence ;  it  has  been  the  home  of  many  famous  men  ;  it  has  passed  through  many 
experiences,  warlike  and  peaceful ;  it  is  gravid  with  associations  and  traditions  that 
deserve  to  be  more  familiar  than  they  are  to  its  people  :  it  has  peculiar  features  of 
character  and  phases  of  society  that  can  be  understood  only  by  those  who  can  trace 
their  development  since  the  times  of  May,  Verhulst,  Minuit,  and  Wouter  Van  Twiller. 
All  the  details  of  its  history,  all  the  traits  of  its  life,  all  the  forces  of  its 
growth,  all  the  notable  personages  who  have  figured  in  its  career,  are 
admirably  delineated  by  Mrs.  Lamb.  With  the  close  of  the  present  volume 
she  reaches  the  period  of  the  Revolution  of  1776,  and  she  handles  the  larger  ques- 
tions and  prominent  leaders  of  the  politics  of  that  period  as  clearly  and  skilfully 
as  she  does  the  minor  matters  of  local  or  family  interest.  Why  should  not  the 
author  of  such  a  history  take  her  place  among  the  other  historians  who  have 
adorned  American  literature?  1  he  work  is  admirably  printed,  in  large  type, 
on  heavy  cream-colored  paper,  and  it  is  profusely  illustrated  vith  maps  and  engrav- 
ings. "Mrs.  Lamb's  "  History  of  the  City  of  New  York"  should  be  in 
the  library  of  every  old  New  Yorker." — N.  Y.  Sim. 

Parties  in  New  York  City  or  vicinity,  who  desire  to  examine  this  work  with  a  view  to 
subscribing,  will,  on  notifying  the  publishers,  be  waited  on  by  one  of  their  agents,  at  such  time 
and  place  as  may  be  most  convenient, 

Published  by  A.  S.  BARNES  &  CO.,  1 1 1  William  St,  New  York  City. 


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